Amendments
2019—Subsec. (b)(7)(A). Pub. L. 116–94, § 109(c)(2), substituted “if the amounts are to be invested in regulated investment company stock to be held in that custodial account, and under the custodial account—” for “if—” and cls. (i) and (ii) for former cls. (i) and (ii) which read as follows:
“(i) the amounts are to be invested in regulated investment company stock to be held in that custodial account, and
“(ii) under the custodial account no such amounts may be paid or made available to any distributee (unless such amount is a distribution to which section 72(t)(2)(G) applies) before the employee dies, attains age 59½, has a severance from employment, becomes disabled (within the meaning of section 72(m)(7)), or in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(5)(D)), encounters financial hardship.”
Subsec. (b)(9)(B). Pub. L. 116–94, § 111(a), inserted “(including an employee described in section 414(e)(3)(B))” after “employee described in paragraph (1)”.
Subsec. (b)(11)(D). Pub. L. 116–94, § 109(c)(1), added subpar. (D).
2008—Subsec. (b)(14). Pub. L. 110–245 added par. (14).
2006—Subsec. (a)(2). Pub. L. 109–280, § 845(b)(1), added par. (2).
Subsec. (a)(4)(B). Pub. L. 109–280, § 829(a)(2), inserted “and (11)” after “(7)”.
Subsec. (b)(2). Pub. L. 109–280, § 845(b)(2), added par. (2).
Subsec. (b)(7)(A)(ii). Pub. L. 109–280, § 827(b)(2), inserted “(unless such amount is a distribution to which section 72(t)(2)(G) applies)” after “distributee”.
Subsec. (b)(8)(B). Pub. L. 109–280, § 829(a)(3), substituted “, (9), and (11)” for “and (9)”.
Subsec. (b)(11)(C). Pub. L. 109–280, § 827(b)(3), added subpar. (C).
2005—Subsec. (b)(9)(B). Pub. L. 109–135 inserted “or” before “a convention”.
2004—Subsec. (a)(4)(B). Pub. L. 108–311, § 404(e), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Rules similar to the rules of paragraphs (2) through (7) of section 402(c) shall apply for purposes of subparagraph (A).”
Subsec. (b)(7)(A)(ii). Pub. L. 108–311, § 408(a)(11), substituted “3121(a)(5)(D)” for “3121(a)(1)(D)”.
2002—Subsec. (b)(1). Pub. L. 107–147, § 411(p)(1), inserted concluding provisions and struck out former concluding provisions which read as follows: “then amounts contributed by such employer for such annuity contract on or after such rights become nonforfeitable shall be excluded from the gross income of the employee for the taxable year to the extent that the aggregate of such amounts does not exceed the applicable limit under section 415. The amount actually distributed to any distributee under such contract shall be taxable to the distributee (in the year in which so distributed) under section 72 (relating to annuities). For purposes of applying the rules of this subsection to amounts contributed by an employer for a taxable year, amounts transferred to a contract described in this paragraph by reason of a rollover contribution described in paragraph (8) of this subsection or section 408(d)(3)(A)(ii) shall not be considered contributed by such employer.”
Subsec. (b)(3). Pub. L. 107–147, § 411(p)(3), in first sentence, inserted “, and which precedes the taxable year by no more than five years” before period at end and, in second sentence, struck out “or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated” after “this subsection applies”.
Subsec. (b)(6). Pub. L. 107–147, § 411(p)(2), struck out heading and text of par. (6). Text read as follows: “For purposes of this subsection and section 72(f) (relating to special rules for computing employees’ contributions to annuity contracts), if rights of the employee under an annuity contract described in subparagraphs (A) and (B) of paragraph (1) change from forfeitable to nonforfeitable rights, then the amount (determined without regard to this subsection) includible in gross income by reason of such change shall be treated as an amount contributed by the employer for such annuity contract as of the time such rights become nonforfeitable.”
2001—Subsec. (b)(1). Pub. L. 107–16, § 642(b)(1), substituted “section 408(d)(3)(A)(ii)” for “section 408(d)(3)(A)(iii)” in concluding provisions.
Pub. L. 107–16, § 632(a)(2)(A), substituted “the applicable limit under section 415” for “the exclusion allowance for such taxable year” in concluding provisions.
Subsec. (b)(2). Pub. L. 107–16, § 632(a)(2)(B), struck out par. (2), which described exclusion allowance for purposes of subsec. (b) providing general criteria, determination under section 415 rules, number of years of service for duly ordained, commissioned, or licensed ministers or lay employees, and alternative exclusion allowance for such ministers or lay employees.
Subsec. (b)(3). Pub. L. 107–16, § 632(a)(2)(C), inserted “or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated” before period at end of second sentence.
Subsec. (b)(7)(A)(ii). Pub. L. 107–16, § 646(a)(2)(A), substituted “has a severance from employment” for “separates from service”.
Subsec. (b)(8)(A)(ii). Pub. L. 107–16, § 641(b)(1), substituted “such distribution to an eligible retirement plan described in section 402(c)(8)(B), and” for “such distribution to an individual retirement plan or to an annuity contract described in paragraph (1), and”.
Subsec. (b)(8)(B). Pub. L. 107–16, § 641(e)(7), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Rules similar to the rules of paragraphs (2) through (7) of section 402(c) (including paragraph (4)(C) thereof) shall apply for purposes of subparagraph (A).”
Subsec. (b)(11). Pub. L. 107–16, § 646(a)(2)(B), substituted “severance from employment” for “separation from service” in heading.
Subsec. (b)(11)(A). Pub. L. 107–16, § 646(a)(2)(A), substituted “has a severance from employment” for “separates from service”.
Subsec. (b)(13). Pub. L. 107–16, § 647(a), added par. (13).
2000—Subsec. (b)(3)(B). Pub. L. 106–554 substituted “section 125, 132(f)(4), or” for “section 125 or”.
1998—Subsec. (b)(8)(B). Pub. L. 105–206 inserted “(including paragraph (4)(C) thereof)” after “section 402(c)”.
1997—Subsec. (b)(1)(A)(iii). Pub. L. 105–34, § 1601(d)(6)(B), added cl. (iii).
Subsec. (b)(3). Pub. L. 105–34, § 1504(a)(1), inserted at end “Such term includes—” and subpars. (A) and (B).
Subsec. (b)(12)(C). Pub. L. 105–34, § 1505(c), added subpar. (C).
1996—Subsec. (b)(1)(E). Pub. L. 104–188, § 1450(c)(1), amended subpar. (E) generally. Prior to amendment, subpar. (E) read as follows: “in the case of a contract purchased under a plan which provides a salary reduction agreement, the plan meets the requirements of section 401(a)(30),”.
Subsec. (b)(10). Pub. L. 104–188, § 1704(t)(69), substituted “a direct” for “an direct” in last sentence.
1992—Subsec. (a)(4)(A)(i). Pub. L. 102–318, § 521(b)(12)(A), inserted before comma at end “in an eligible rollover distribution (within the meaning of section 402(c)(4))”.
Subsec. (a)(4)(B). Pub. L. 102–318, § 521(b)(12)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “Rules similar to the rules of subparagraphs (B) through (G) of section 402(a)(5) and of paragraphs (6) and (7) of section 402(a) shall apply for purposes of subparagraph (A).”
Subsec. (a)(5). Pub. L. 102–318, § 522(c)(2), added par. (5).
Subsec. (b)(8)(A)(i). Pub. L. 102–318, § 521(b)(13)(A), inserted before comma at end “in an eligible rollover distribution (within the meaning of section 402(c)(4))”.
Subsec. (b)(8)(B) to (D). Pub. L. 102–318, § 521(b)(13)(B), added subpar. (B) and struck out former subpars. (B) to (D), which related to special rules for partial distributions, applicability of certain similar rules, and eligibility for rollover treatment of required distributions.
Subsec. (b)(10). Pub. L. 102–318, § 522(a)(3), (c)(3), substituted “sections 401(a)(9) and 401(a)(31)” for “section 401(a)(9)” and inserted at end “Any amount transferred in an direct trustee-to-trustee transfer in accordance with section 401(a)(31) shall not be includible in gross income for the taxable year of the transfer.”
1990—Subsec. (b)(12)(A). Pub. L. 101–508 inserted “involving a one-time irrevocable election” after “similar arrangement” in second sentence.
1988—Subsec. (b)(1)(D). Pub. L. 100–647, § 1011(m)(1)(B), substituted “paragraph (12)” for “paragraph (10)”.
Subsec. (b)(1)(E). Pub. L. 100–647, § 1011(c)(7)(B), added subpar. (E).
Subsec. (b)(10). Pub. L. 100–647, § 1011(m)(1)(A), redesignated par. (10), relating to nondiscrimination requirements, as (12).
Subsec. (b)(12). Pub. L. 100–647, § 1011(m)(1)(A), redesignated par. (10), relating to nondiscrimination requirements, as (12).
Subsec. (b)(12)(A). Pub. L. 100–647, § 1011(m)(2), inserted “(17),” after “paragraphs (4), (5),” and “, section 401(m),” after “of section 401(a)” in cl. (i).
Pub. L. 100–647, § 1011(c)(12), inserted after cl. (ii) “For purposes of clause (i), a contribution shall be treated as not made pursuant to a salary reduction agreement if under the agreement it is made pursuant to a 1-time irrevocable election made by the employee at the time of initial eligibility to participate in the agreement or is made pursuant to a similar arrangement specified in regulations.”
Pub. L. 100–647, § 6052(a)(1), amended last sentence generally. Prior to amendment, last sentence read as follows: “For purposes of this subparagraph, students who normally work less than 20 hours per week may (subject to the conditions applicable under section 410(b)(4)) be excluded.”
1986—Subsec. (a)(1). Pub. L. 99–514, § 1122(d)(1), substituted “Distributee taxable under section 72” for “General rule” in heading and amended par. (1) generally. Prior to amendment, par. (1) read as follows: “Except as provided in paragraph (2), if an annuity contract is purchased by an employer for an employee under a plan which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section), the employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities).”
Subsec. (a)(2). Pub. L. 99–514, § 1122(b)(1)(B), struck out par. (2) which read as follows:
“(A) General rule
“If—
“(i) an annuity contract is purchased by an employer for an employee under a plan described in paragraph (1);
“(ii) such plan requires that refunds of contributions with respect to annuity contracts purchased under such plan be used to reduce subsequent premiums on the contracts under the plan; and
“(iii) a lump sum distribution (as defined in section 402(e)(4)(A)) is paid to the recipient,
so much of the total taxable amount (as defined in section 402(e)(4)(D)) of such distribution as is equal to the product of such total taxable amount multiplied by the fraction described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c)(1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph.
“(B) Cross reference
“For imposition of separate tax on ordinary income portion of lump sum distribution, see section 402(e).”
Subsec. (a)(4)(B). Pub. L. 99–514, § 1852(a)(5)(B)(i), substituted “through (G)” for “through (F)”.
Subsec. (b)(1). Pub. L. 99–514, § 1122(d)(2), amended second sentence generally. Prior to amendment, second sentence read as follows: “The employee shall include in his gross income the amounts received under such contract for the year received as provided in section 72 (relating to annuities)”.
Subsec. (b)(1)(D). Pub. L. 99–514, § 1120(a), added subpar. (D).
Subsec. (b)(7)(A)(ii). Pub. L. 99–514, § 1123(c)(2), inserted “in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(1)(D)),” after “section 72(m)(7)), or”.
Subsec. (b)(7)(D). Pub. L. 99–514, § 1852(a)(3)(B), struck out subpar. (D) “Distribution requirements” which read as follows: “For purposes of determining when the interest of an employee in a custodial account must be distributed, such account shall be treated in the same manner as an annuity contract.”
Subsec. (b)(8)(C). Pub. L. 99–514, § 1852(b)(10), inserted “and” before “(F)(i)”.
Subsec. (b)(8)(D). Pub. L. 99–514, § 1852(a)(5)(B)(ii), added subpar. (D).
Subsec. (b)(10). Pub. L. 99–514, § 1120(b), added par. (10) relating to nondiscrimination requirements.
Pub. L. 99–514, § 1852(a)(3)(A), added par. (10) relating to distribution requirements.
Subsec. (b)(11). Pub. L. 99–514, § 1123(c)(1), added par. (11).
Subsec. (c). Pub. L. 99–514, § 1122(d)(3), amended last sentence generally. Prior to amendment, last sentence read as follows: “The amount actually paid or made available to any beneficiary under such contract shall be taxable to him in the year in which so paid or made available under section 72 (relating to annuities).”
1984—Subsec. (a)(2)(A). Pub. L. 98–369, § 1001(b)(4), substituted “6 months” for “1 year”, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 Amendment note below.
Subsec. (a)(4)(A)(i). Pub. L. 98–369, § 522(a)(2), substituted “any portion of the balance to the credit of an employee in an employee annuity described in paragraph (1) is paid to him,” for “the balance to the credit of an employee in an employee annuity described in paragraph (1) is paid to him in a qualifying rollover distribution.”
Subsec. (a)(4)(B). Pub. L. 98–369, § 522(d)(9), substituted “(B) through (F)” for “(B) through (E)”.
Subsec. (b)(1). Pub. L. 98–369, § 491(d)(12), struck out “or 409(b)(3)(C)” after “408(d)(3)(A)(iii)”.
Subsec. (b)(7)(D). Pub. L. 98–369, § 521(c), added subpar. (D).
Subsec. (b)(8)(A)(i). Pub. L. 98–369, § 522(a)(3), substituted “any portion of the balance to the credit of an employee in an annuity contract described in paragraph (1) is paid to him” for “the balance to the credit of an employee is paid to him in a qualifying distribution”.
Subsec. (b)(8)(B). Pub. L. 98–369, § 522(d)(10), substituted provisions relating to special rules for partial distributions for provisions relating to definition of qualifying distributions.
Subsec. (b)(8)(C). Pub. L. 98–369, § 522(d)(11), substituted “(F)(i)” for “(D)(v), and (E)(i)”.
1983—Subsec. (b)(3). Pub. L. 98–21 substituted “section 911” for “sections 105(d) and 911”.
Subsec. (b)(8)(C). Pub. L. 97–448 substituted “subparagraphs (B), (C), (D)(v), and (E)(i) of section 402(a)(5)” for “subparagraphs (B), (C), and (E)(i) of section 402(a)(5)”.
1982—Subsec. (b)(2)(B). Pub. L. 97–248, § 251(a)(1), (c)(3), substituted “home health service agencies, and certain churches, etc.” for “and home health service agencies”, and “(under section 415 without regard to section 415(c)(8))” for “(under section 415)”.
Subsec. (b)(2)(C), (D). Pub. L. 97–248, § 251(a)(2), added subpars. (C) and (D).
Subsec. (b)(9). Pub. L. 97–248, § 251(b), added par. (9).
1981—Subsec. (b)(8)(B)(i). Pub. L. 97–34 inserted “, or 1 or more distributions of accumulated deductible employee contributions (within the meaning of section 72(o)(5))” after “subsection (a)”.
1980—Subsec. (b). Pub. L. 96–222 substituted in par. (1) “409(b)(3)(C)” for “409(d)(3)(C)”, and in par. (7)(A) “which satisfies” for “which satisfied”.
1978—Subsec. (a)(4). Pub. L. 95–600, § 157(g)(2), in subpar. (B) substituted “paragraphs (6) and (7)” for “paragraph (6)”.
Pub. L. 95–458, among other changes, substituted provision permitting tax free treatment for any portion of a lump sum distribution from a qualified retirement plan which is deposited in an individual retirement account or another qualifying plan for provision which required transfer of all such property received.
Subsec. (a)(5). Pub. L. 95–458 struck out par. (5) which related to special rules concerning time of termination of a profit-sharing plan and the treatment of the sale of a corporate subsidiary or assets as payment or distribution on account of termination of a plan of which an annuity trust was a part.
Subsec. (b)(1). Pub. L. 95–600, § 156(b), inserted provision relating to application of rules of this subsection to amounts contributed by an employer for a taxable year.
Subsec. (b)(7)(A). Pub. L. 95–600, § 154(a), struck out “the amounts are paid to provide a retirement benefit for that employee and are to be invested in regulated investment company stock to be held in that custodial account” after “contract for his employee if”, and added cls. (i) and (ii).
Subsec. (b)(8). Pub. L. 95–600, § 156(a), added par. (8).
1976—Subsec. (a)(2)(A). Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”.
Pub. L. 94–455, § 1402(b) (1)(D), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.
Subsec. (a)(4). Pub. L. 94–455, § 1901(a)(58), reenacted provisions following subpar. (C) without substantive change.
Pub. L. 94–267, § 1(b)(2), substituted “a payment” for “the lump-sum distribution”.
Subsec. (a)(4)(A). Pub. L. 94–267, § 1(b)(1), restructured provisions by adding cl. (i) and designating existing provision as cl. (ii).
Subsec. (a)(5). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.
Pub. L. 94–267, § 1(b)(3), added par. (5).
Subsec. (b)(1)(A)(ii). Pub. L. 94–455, § 1901(b)(8)(A), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution (as defined in section 151(e)(4))”.
Subsec. (b)(4)(B). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (b)(7)(C). Pub. L. 94–455, § 1504(a), struck out “, and which issues only redeemable stock” after “regulated investment company within the meaning of section 851(a)”.
1974—Subsec. (a)(2). Pub. L. 93–406, § 2005(b)(2), substituted “a lump sum distribution (as defined in section 4002(e)(4)(A)) is paid to the recipient” for “the total amounts payable by reason of an employee’s death or other separation from the service, or by reason of the death of an employee after the employee’s separation from the service, are paid to the payee within one taxable year of the payee” as cl. (iii) of subpar. (A), substituted “so much of the total taxable amount (as defined in section 402(e)(4)(D)) of such distribution as is equal to the product of such total taxable amount multiplied by the fraction described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c)(1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph” for “then the amount of such payments, to the extent exceeding the amount contributed by the employee (determined by applying section 72(f)), which employee contributions shall be reduced by any amounts theretofore paid to him which were not includible in gross income, shall be considered a gain from the sale or exchange of a capital asset held for more than 6 months. This subparagraph shall not apply to amounts paid to any payee to the extent such amounts are attributable to contributions made on behalf of the employee while he was an employee within the meaning of section 401(c)(1)” following cl. (iii) of subpar. (A), substituted provisions setting out a cross reference to section 402(e) for provisions defining “total amounts” as subpar. (B), and struck out subpar. (C) setting out limitations on capital gains treatment.
Subsec. (a)(4). Pub. L. 93–406, § 2002(g)(6), added par. (4).
Subsec. (b)(2). Pub. L. 93–406, § 2004(c)(4), designated existing provisions as subpar. (A) and added subpar. (B).
Subsec. (b)(7). Pub. L. 93–406, § 1022(e), added par. (7).
1969—Subsec. (a)(2)(C). Pub. L. 91–172, § 515(a)(2), added subpar. (C).
Subsec. (c). Pub. L. 91–172, § 321(b)(2), consolidated provisions of subsec. (c) providing for taxability of beneficiary under a nonqualified annuity, the employees gross income to include amount contributed by employer for annuity contract in the year in which amount is contributed, the amount to be included as provided in section 72 of this title and of subsec. (d) providing for taxability of beneficiary under certain forfeitable contracts purchased by exempt organizations, including farmers’ cooperatives, the gross income to include amount contributed by employer after Dec. 31, 1957, in the year of change from forfeitable to nonforfeitable rights, the new provisions including premiums paid by an employer in accordance with section 83, except that value of the contract shall be substituted for fair market value of the property for purposes of applying such section 83, such provision not to be applicable to that portion of premiums paid which is excluded from gross income under subsec. (b) of this section.
Subsec. (d). Pub. L. 91–172, § 321(b)(2), struck out subsec. (d) providing for taxability of beneficiary under certain forfeitable contracts purchased by exempt organizations, including farmers’ cooperatives, gross income of the employee to include (amount contributed by employer after Dec. 31, 1957), in year of change from forfeitable to nonforfeitable rights. See subsec. (c) of this section.
1964—Subsecs. (a)(1), (b)(1), (c). Pub. L. 88–272, § 232(e)(4)–(6), struck out “except that section 72(e)(3) shall not apply” after “(relating to annuities)”.
1962—Subsec. (a)(2)(A). Pub. L. 87–792, § 4(d)(1), (2), substituted “described in paragraph (1)” for “which meets the requirements of section 401(a)(3), (4), (5), and (6)” in cl. (i), and inserted sentence at end thereof providing that this subparagraph shall not apply to amounts paid to any payee to the extent such amounts are attributable to contributions made on behalf of the employee while he was an employee within the meaning of section 401(c)(1).
Subsec. (a)(3). Pub. L. 87–792, § 4(d)(3), added par. (3).
1961—Subsec. (b). Pub. L. 87–370, § 3(a)(3), inserted “or public school” in heading.
Subsec. (b)(1)(A). Pub. L. 87–370, § 3(a)(1), included annuity contracts purchased for an employee, other than one described in clause (i) of this subpar., who performs services for an educational institution, as defined in section 151(e)(4) of this title, by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of either.
Subsec. (b)(3). Pub. L. 87–370, § (3)(a)(2), substituted “the employer described in paragraph (1)(A)” for “the employer described in section 501(c)(3) and exempt from tax under section 501(a)”.
1958—Subsec. (a)(1). Pub. L. 85–866, § 23(b), substituted “which meets the requirements of section 404(a)(2) (whether or not the employer deducts the amounts paid for the contract under such section),” for “with respect to which the employer’s contribution is deductible under section 404(a)(2), or if an annuity contract is purchased for an employee by an employer described in section 501(c)(3) which is exempt from tax under section 501(a),”.
Subsecs. (b) to (d). Pub. L. 85–866, § 23(a), added subsec. (b), redesignated former subsec. (b) as (c), and added subsec. (d).
