§ 4973 Tax on excess contributions to certain tax-favored accounts and annuities
(a) Tax imposed
In the case of—
(1) an individual retirement account (within the meaning of section ),
(2) an Archer MSA (within the meaning of section ),
(3) an individual retirement annuity (within the meaning of section ), a custodial account treated as an annuity contract under section (relating to custodial accounts for regulated investment company stock),
(4) a Coverdell education savings account (as defined in section ),
(5) a health savings account (within the meaning of section ), or
(6) an ABLE account (within the meaning of section ),
there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts or annuities (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account or annuity (determined as of the close of the taxable year). In the case of an endowment contract described in section , the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.
(b) Excess contributions
For purposes of this section, in the case of individual retirement accounts or individual retirement annuities, the term “excess contributions” means the sum of—
(1) the excess (if any) of—
(A) the amount contributed for the taxable year to the accounts or for the annuities (other than a contribution to a Roth IRA or a rollover contribution described in section , , , , or ), over
(B) the amount allowable as a deduction under section for such contributions, and
(2) the amount determined under this subsection for the preceding taxable year reduced by the sum of—
(A) the distributions out of the account for the taxable year which were included in the gross income of the payee under section ,
(B) the distributions out of the account for the taxable year to which section applies, and
(C) the excess (if any) of the maximum amount allowable as a deduction under section for the taxable year over the amount contributed (determined without regard to section ) to the accounts or for the annuities (including the amount contributed to a Roth IRA) for the taxable year.
For purposes of this subsection, any contribution which is distributed from the individual retirement account or the individual retirement annuity in a distribution to which section applies shall be treated as an amount not contributed. For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section shall be computed without regard to section . Such term shall not include any designated nondeductible contribution (as defined in subparagraph (C) of section ) which does not exceed the nondeductible limit under subparagraph (B) thereof by reason of an election under section .
(c) Section 403(b) contracts
For purposes of this section, in the case of a custodial account referred to in subsection (a)(3), the term “excess contributions” means the sum of—
(1) the excess (if any) of the amount contributed for the taxable year to such account (other than a rollover contribution described in section or ), over the lesser of the amount excludable from gross income under section or the amount permitted to be contributed under the limitations contained in section (or under whichever such section is applicable, if only one is applicable), and
(2) the amount determined under this subsection for the preceding taxable year, reduced by—
(A) the excess (if any) of the lesser of (i) the amount excludable from gross income under section or (ii) the amount permitted to be contributed under the limitations contained in section over the amount contributed to the account for the taxable year (or under whichever such section is applicable, if only one is applicable), and
(B) the sum of the distributions out of the account (for all prior taxable years) which are included in gross income under section .
(d) Excess contributions to Archer MSAs
For purposes of this section, in the case of Archer MSAs (within the meaning of section ), the term “excess contributions” means the sum of—
(1) the aggregate amount contributed for the taxable year to the accounts (other than rollover contributions described in section ) which is neither excludable from gross income under section nor allowable as a deduction under section for such year, and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—
(A) the distributions out of the accounts which were included in gross income under section , and
For purposes of this subsection, any contribution which is distributed out of the Archer MSA in a distribution to which section or section applies shall be treated as an amount not contributed.
(e) Excess contributions to Coverdell education savings accounts
For purposes of this section—
(1) In general
In the case of Coverdell education savings accounts maintained for the benefit of any one beneficiary, the term “excess contributions” means the sum of—
(A) the amount by which the amount contributed for the taxable year to such accounts exceeds $2,000 (or, if less, the sum of the maximum amounts permitted to be contributed under section by the contributors to such accounts for such year); and
(B) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—
(i) the distributions out of the accounts for the taxable year (other than rollover distributions); and
(ii) the excess (if any) of the maximum amount which may be contributed to the accounts for the taxable year over the amount contributed to the accounts for the taxable year.
(f) Excess contributions to Roth IRAs
For purposes of this section, in the case of contributions to a Roth IRA (within the meaning of section ), the term “excess contributions” means the sum of—
(1) the excess (if any) of—
(A) the amount contributed for the taxable year to Roth IRAs (other than a qualified rollover contribution described in section ), over
(B) the amount allowable as a contribution under sections and (c)(3), and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—
(A) the distributions out of the accounts for the taxable year, and
(B) the excess (if any) of the maximum amount allowable as a contribution under sections and (c)(3) for the taxable year over the amount contributed by the individual to all individual retirement plans for the taxable year.
For purposes of this subsection, any contribution which is distributed from a Roth IRA in a distribution described in section shall be treated as an amount not contributed.
(g) Excess contributions to health savings accounts
For purposes of this section, in the case of health savings accounts (within the meaning of section ), the term “excess contributions” means the sum of—
(1) the aggregate amount contributed for the taxable year to the accounts (other than a rollover contribution described in section or ) which is neither excludable from gross income under section nor allowable as a deduction under section for such year, and
(2) the amount determined under this subsection for the preceding taxable year, reduced by the sum of—
(A) the distributions out of the accounts which were included in gross income under section , and
For purposes of this subsection, any contribution which is distributed out of the health savings account in a distribution to which section applies shall be treated as an amount not contributed.
(h) Excess contributions to ABLE account
For purposes of this section—
(1) In general
In the case of an ABLE account (within the meaning of section ), the term “excess contributions” means the amount by which the amount contributed for the taxable year to such account (other than contributions under section or contributions received in a qualified ABLE rollover contribution described in section ) exceeds the contribution limit under section .
(2) Special rule
For purposes of this subsection, any contribution which is distributed out of the ABLE account in a distribution to which the last sentence of section applies shall be treated as an amount not contributed.
(Added Pub. L. 93–406, title II, § 2002(d), Sept. 2, 1974, 88 Stat. 966; amended Pub. L. 94–455, title XV, § 1501(b)(8), title XIX, § 1904(a)(22), Oct. 4, 1976, 90 Stat. 1736, 1814; Pub. L. 95–600, title I, §§ 156(c)(3), (5), 157(b)(3), (j)(1), title VII, § 701(aa)(1), Nov. 6, 1978, 92 Stat. 2803, 2804, 2809, 2921; Pub. L. 96–222, title I, § 101(a)(13)(C), (14)(B), Apr. 1, 1980, 94 Stat. 204; Pub. L. 97–34, title III, §§ 311(h)(7), (9), (10), 313(b)(2), Aug. 13, 1981, 95 Stat. 282, 286; Pub. L. 98–369, div. A, title IV, § 491(d)(41)–(44), (55), July 18, 1984, 98 Stat. 851, 852; Pub. L. 99–514, title XI, § 1102(b)(1), title XVIII, § 1848(f), Oct. 22, 1986, 100 Stat. 2415, 2858; Pub. L. 100–647, title I, § 1011(b)(3), Nov. 10, 1988, 102 Stat. 3456; Pub. L. 102–318, title V, § 521(b)(41), July 3, 1992, 106 Stat. 313; Pub. L. 104–188, title I, § 1704(t)(70), (72), Aug. 20, 1996, 110 Stat. 1891; Pub. L. 104–191, title III, § 301(e), Aug. 21, 1996, 110 Stat. 2051; Pub. L. 105–33, title IV, § 4006(b)(1), Aug. 5, 1997, 111 Stat. 333; Pub. L. 105–34, title II, § 213(d), title III, § 302(b), Aug. 5, 1997, 111 Stat. 817, 828; Pub. L. 105–206, title VI, §§ 6004(d)(10), 6005(b)(8), 6023(18)(A), July 22, 1998, 112 Stat. 795, 799, 825; Pub. L. 106–554, § 1(a)(7) [title II, § 202(a)(6), (b)(2)(C), (6), (10)], Dec. 21, 2000, 114 Stat. 2763, 2763A–628, 2763A–629; Pub. L. 107–16, title IV, §§ 401(a)(2), (g)(2)(D), 402(a)(4)(A), title VI, § 641(e)(11), June 7, 2001, 115 Stat. 57, 60, 121; Pub. L. 107–22, § 1(b)(1)(C), (2)(B), (4), July 26, 2001, 115 Stat. 197; Pub. L. 108–173, title XII, § 1201(e), Dec. 8, 2003, 117 Stat. 2478; Pub. L. 108–311, title IV, § 408(a)(22), Oct. 4, 2004, 118 Stat. 1192; Pub. L. 113–295, div. B, title I, § 102(b), Dec. 19, 2014, 128 Stat. 4061; Pub. L. 117–328, div. T, title IV, § 401(a)(3), Dec. 29, 2022, 136 Stat. 5388; Pub. L. 119–21, title VII, § 70204(a)(2)(C), July 4, 2025, 139 Stat. 185.)
Operative text only. Editorial notes, amendment history, and effective dates: official OLRC text of § 4973