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Pension Resource

I.R.C. § 4971

Taxes on failure to meet minimum funding standards
USC 1996 ed., current through 1997-01-06 · superseded Jan 3, 2007 · last amended by Pub. L. 104-188
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(a) Initial tax For each taxable year of an employer who maintains a plan to which section 412 applies, there is hereby imposed a tax of 10 percent (5 percent in the case of a multiemployer plan) on the amount of the accumulated funding deficiency under the plan, determined as of the end of the plan year ending with or within such taxable year.
(b) Additional tax In any case in which an initial tax is imposed by subsection (a) on an accumulated funding deficiency and such accumulated funding deficiency is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of such accumulated funding deficiency to the extent not corrected.
(c) Definitions For purposes of this section—
(1) Accumulated funding deficiency The term “accumulated funding deficiency” has the meaning given to such term by the last two sentences of section 412(a).
(2) Correct The term “correct” means, with respect to an accumulated funding deficiency, the contribution, to or under the plan, of the amount necessary to reduce such accumulated funding deficiency as of the end of a plan year in which such deficiency arose to zero.
(3) Taxable period The term “taxable period” means, with respect to an accumulated funding deficiency, the period beginning with the end of the plan year in which there is an accumulated funding deficiency and ending on the earlier of—
(A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a), or
(B) the date on which the tax imposed by subsection (a) is assessed.
(d) Notification of the Secretary of Labor Before issuing a notice of deficiency with respect to the tax imposed by subsection (a) or (b), the Secretary shall notify the Secretary of Labor and provide him a reasonable opportunity (but not more than 60 days)—
(1) to require the employer responsible for contributing to or under the plan to eliminate the accumulated funding deficiency, or
(2) to comment on the imposition of such tax.
In the case of a multiemployer plan which is in reorganization under section 418, the same notice and opportunity shall be provided to the Pension Benefit Guaranty Corporation.
(e) Liability for tax
(1) In general Except as provided in paragraph (2), the tax imposed by subsection (a), (b), or (f) shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412(b)(3)(A).
(2) Joint and several liability where employer member of controlled group
(A) In general In the case of a plan other than a multiemployer plan, if the employer referred to in paragraph (1) is a member of a controlled group, each member of such group shall be jointly and severally liable for the tax imposed by subsection (a), (b), or (f).
(B) Controlled group For purposes of subparagraph (A), the term “controlled group” means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.
(f) Failure to pay liquidity shortfall
(1) In general In the case of a plan to which section 412(m)(5) applies, there is hereby imposed a tax of 10 percent of the excess (if any) of—
(A) the amount of the liquidity shortfall for any quarter, over
(B) the amount of such shortfall which is paid by the required installment under section 412(m) for such quarter (but only if such installment is paid on or before the due date for such installment).
(2) Additional tax If the plan has a liquidity shortfall as of the close of any quarter and as of the close of each of the following 4 quarters, there is hereby imposed a tax equal to 100 percent of the amount on which tax was imposed by paragraph (1) for such first quarter.
(3) Definitions and special rule
(A) Liquidity shortfall; quarter For purposes of this subsection, the terms “liquidity shortfall” and “quarter” have the respective meanings given such terms by section 412(m)(5).
(B) Special rule If the tax imposed by paragraph (2) is paid with respect to any liquidity shortfall for any quarter, no further tax shall be imposed by this subsection on such shortfall for such quarter.
(4) Waiver by Secretary If the taxpayer establishes to the satisfaction of the Secretary that—
(A) the liquidity shortfall described in paragraph (1) was due to reasonable cause and not willful neglect, and
(B) reasonable steps have been taken to remedy such liquidity shortfall,
the Secretary may waive all or part of the tax imposed by this subsection.
(g) Cross references For disallowance of deduction for taxes paid under this section, see section 275.
For liability for tax in case of an employer party to collective bargaining agreement, see section 413(b)(6).
For provisions concerning notification of Secretary of Labor of imposition of tax under this section, waiver of the tax imposed by subsection (b), and other coordination between Secretary of the Treasury and Secretary of Labor with respect to compliance with this section, see section 3002(b) of title III of the Employee Retirement Income Security Act of 1974.
Source credit, amendments & notes

(Added Pub. L. 93–406, title II, §1013(b), Sept. 2, 1974, 88 Stat. 920; amended Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–364, title II, §204, Sept. 26, 1980, 94 Stat. 1287; Pub. L. 96–596, §2(a)(1)(J), (2)(H), Dec. 24, 1980, 94 Stat. 3469, 3471; Pub. L. 100–203, title IX, §§9304(c)(1), 9305(a), Dec. 22, 1987, 101 Stat. 1330–348, 1330–351; Pub. L. 103–465, title VII, §751(a)(9)(B), Dec. 8, 1994, 108 Stat. 5020; Pub. L. 104–188, title I, §1464(a), Aug. 20, 1996, 110 Stat. 1824.)

References in Text

Section 3002(b) of title III of the Employee Retirement Income Security Act of 1974, referred to in subsec. (g), is classified to section 1202(b) of Title 29, Labor.

Amendments

1996—Subsec. (f)(4). Pub. L. 104–188 added par. (4).

1994—Subsec. (e)(1), (2)(A). Pub. L. 103–465, §751(a)(9)(B)(i), substituted “(a), (b), or (f)” for “(a) or (b)”.

Subsecs. (f), (g). Pub. L. 103–465, §751(a)(9)(B)(ii), added subsec. (f) and redesignated former subsec. (f) as (g).

1987—Subsec. (a). Pub. L. 100–203, §9305(a)(2)(A), struck out at end “The tax imposed by this subsection shall be paid by the employer responsible for contributing to or under the plan the amount described in section 412(b)(3)(A).”

Pub. L. 100–203, §9304(c)(1), substituted “10 percent (5 percent in the case of a multiemployer plan)” for “5 percent”.

Subsec. (b). Pub. L. 100–203, §9305(a)(2)(B), struck out at end “The tax imposed by this subsection shall be paid by the employer described in subsection (a).”

Subsecs. (e), (f). Pub. L. 100–203, §9305(a)(1), added subsec. (e) and redesignated former subsec. (e) as (f).

1980—Subsec. (b). Pub. L. 96–596, §2(a)(1)(J), substituted “taxable period” for “correction period”.

Subsec. (c)(1). Pub. L. 96–364, §204(1), substituted “last two sentences” for “last sentence”.

Subsec. (c)(3). Pub. L. 96–596, §2(a)(2)(H), substituted provision defining taxable period as the period beginning with the end of the plan year in which there is an accumulated funding deficiency and ending on the earlier of the date of mailing of a notice of deficiency with respect to the tax imposed by subsec. (a) of this section or the date on which the tax imposed by subsec. (a) of this section is assessed for provision defining correction period as the period beginning with the end of a plan year in which there is an accumulated funding deficiency and ending 90 days after the date of mailing of a notice of deficiency under section 6212 of this title with respect to the tax imposed by subsec. (b) of this section, extended by any period in which a deficiency cannot be assessed under section 6213(a) of this title and by any other period which the Secretary determines reasonable and necessary to permit a reduction of the accumulated funding deficiency to zero.

Subsec. (d). Pub. L. 96–364, §204(2), inserted provisions relating to a multiemployer plan in reorganization.

1976—Subsecs. (c), (d). Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.

Effective Date of 1996 Amendment

Section 1464(b) of Pub. L. 104–188 provided that: “The amendment made by this section [amending this section] shall take effect as if included in the amendment made by clause (ii) of section 751(a)(9)(B) of the Retirement Protection Act of 1994 [Pub. L. 103–465] (108 Stat. 5020).”

Effective Date of 1994 Amendment

Amendment by Pub. L. 103–465 applicable to plan years beginning after Dec. 31, 1994, see section 751(b)(1) of Pub. L. 103–465, set out as a note under section 401 of this title.

Effective Date of 1987 Amendment

Section 9304(c)(2) of Pub. L. 100–203 provided that: “The amendments made by this subsection [amending this section] shall apply to plan years beginning after 1988.”

Amendment by section 9305(a) of Pub. L. 100–203 applicable with respect to plan years beginning after December 31, 1987, see section 9305(d) of Pub. L. 100–203, set out as a note under section 412 of this title.

Effective Date of 1980 Amendments

For effective date of amendment by Pub. L. 96–596 with respect to any first tier tax and to any second tier tax, see section 2(d) of Pub. L. 96–596, set out as an Effective Date note under section 4961 of this title.

Amendment by Pub. L. 96–364 effective Sept. 26, 1980, see section 210(a) of Pub. L. 96–364, set out as an Effective Date note under section 418 of this title.

Effective Date

Section applicable, except as otherwise provided in section 1017(c) through (i) of Pub. L. 93–406, for plan years beginning after Sept. 2, 1974, and, in the case of plans in existence on Jan. 1, 1974, for plan years beginning after Dec. 31, 1975, see section 1017 of Pub. L. 93–406, set out as an Effective Date; Transitional Rules note under section 410 of this title.

Plan Amendments Not Required Until January 1, 1998

For provisions directing that if any amendments made by subtitle D [§§1401–1465] of title I of Pub. L. 104–188 require an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L. 104–188, set out as a note under section 401 of this title.

I.R.C. § 4971 — Taxes on failure to meet minimum funding standards · USC 1996 ed., current through 1997-01-06 · https://pensionresource.website/EAMain?content=EAMain.Law&id=irc-4971&asof=2000-12-28 · printed Oct 16, 2026
On this page
  • (a) Initial tax
  • (b) Additional tax
  • (c) Definitions
  • (d) Notification of the Secretary of Labor
  • (e) Liability for tax
  • (f) Failure to pay liquidity shortfall
  • (g) Cross references
Cited by (code & regs)
Treasury Regulations
Guidance addressing this section
IRS / Treasury
Notices
  • Notice 2020-61 Aug 24, 2020 — Special Funding and Benefit Limitation Rules for Single-Employer Defined Benefit Pension Plans under the CARES Act (a)(c)(4)
Final Rules
Revenue Rulings
  • Rev. Rul. 2003-88 Aug 11, 2003 — Section 4971; running of statute of limitations; and filing of form. This ruling states that the filing of a Form 5330, and not the filing of a Form 5500, star… (a)(f)
Delegation Orders
  • Deleg. Order 7-7 — Waiver of Excise Taxes Imposed Under Section 4971 and Section 4980F of the Internal Revenue Code (b)(f)
Also cited in 24 other documents
IRS / Treasury
Revenue Procedures
  • Rev. Proc. 2026-4Modified Dec 29, 2025 — This revenue procedure contains updates relating to the types of advice the Internal Revenue Service provides to taxpayers on issues under the jurisdiction of … (f)(4)
    Modified by Rev. Proc. 2026-30
  • Rev. Proc. 2025-4Superseded Dec 30, 2024 — This document updates Rev. Proc. 2024-4, 2024-1 IRB 160, relating to the types of advice the IRS provides to taxpayers on issues under the jurisdiction of the … (f)(4)
    Superseded by Rev. Proc. 2026-4
  • Rev. Proc. 2024-4Superseded Jan 2, 2024 — This document updates Rev. Proc. 2023-4, 2023-1 IRB 162, relating to the types of advice the IRS provides to taxpayers on issues under the jurisdiction of the … (f)(4)
    Superseded by Rev. Proc. 2025-4
  • Rev. Proc. 2023-4Superseded Jan 3, 2023 — This document updates Rev. Proc. 2022-4, 2022-1 IRB 161, relating to the types of advice the IRS provides to taxpayers on issues under the jurisdiction of the … (f)(4)
    Superseded by Rev. Proc. 2024-4
  • Rev. Proc. 2022-4Superseded Jan 3, 2022 — This document updates Rev. Proc. 2021-4, 2021-1 IRB 157, relating to the types of advice the IRS provides to taxpayers on issues under the jurisdiction of the … (f)(4)
    Superseded by Rev. Proc. 2023-4
  • Rev. Proc. 2021-4Superseded Jan 4, 2021 — This document updates Rev. Proc. 2020-4, 2020-1 I.R.B. 148, relating to the types of advice the IRS provides to taxpayers on issues under the jurisdiction of t… (f)(4)
    Superseded by Rev. Proc. 2022-4
  • Rev. Proc. 2020-4 Jan 2, 2020 — This revenue procedure contains information on the types of advice provided by the Commissioner, Tax Exempt and Government Entities Division, Employee Plans Ru… (f)(4)
  • Rev. Proc. 2019-4 Jan 2, 2019 — This procedure contains revised procedures for determination letters and letter rulings issued by the Commissioner, Tax Exempt Agreements Office. Rev. Proc. 20… (f)(4)
  • Rev. Proc. 2018-4 Jan 2, 2018 — This procedure contains revised procedures for determination letters and letter rulings issued by the Commissioner, Tax Exempt and Government Entities Division… (f)(4)
  • Rev. Proc. 2017-4 Jan 3, 2017 — This procedure contains consolidated and revised procedures for determination letters and letter rulings issued by the Commissioner, Tax Exempt and Government … (f)(4)
  • Rev. Proc. 2014-4 Jan 2, 2014 — Rulings and information letters; issuance procedures. Revised procedures are provided for furnishing ruling letters, information letters, etc., on matters rela… (b)(f)(4)
  • Rev. Proc. 2014-8 Jan 2, 2014 — User fees for employee plans and exempt organizations. Current guidance for complying with the user fee program of the Service as it pertains to requests for l… (b)(f)
  • Rev. Proc. 2013-4Modified Jan 2, 2013 — Rulings and information letters; issuance procedures. Revised procedures are provided for furnishing ruling letters, information letters, etc., on matters rela… (b)(f)(4)
    Modified by Rev. Proc. 2013-22
  • Rev. Proc. 2013-8Modified Jan 2, 2013 — User fees for employee plans and exempt organizations. Current guidance for complying with the user fee program of the Service as it pertains to requests for l… (b)(f)
    Modified by Rev. Proc. 2013-22
Notices
  • Notice 2021-57 Nov 1, 2021 — Notice 2021-57 provides guidance to multiemployer defined benefit pension plan sponsors and actuaries on the application of funding relief under IRC § 431 and … (a)(g)(g)(1)(A)(g)(3)
  • Notice 2021-48 Aug 16, 2021 — Guidance on Single-Employer Defined Benefit Pension Plan Funding Changes under the American Rescue Plan Act of 2021
  • Notice 2015-58 Sep 14, 2015 — This notice provides guidance on certain issues relating to the application of the Cooperative and Small Employer Charity Pension Flexibility Act, Pub. L. No. … (h)(1)
  • Notice 2011-3 Jan 10, 2011 — Special rules relating to funding relief for single-employer pension plans under PRA 2010. This notice provides guidance on the special rules relating to fundi… (a)
  • Notice 2009-31 Apr 20, 2009 — Election and notice procedures for multiemployer plans under sections 204 and 205 of WRERA. This notice provides guidance for sponsors of multiemployer defined… (a)(g)(g)(1)(A)
  • Notice 2005-40 May 23, 2005 — Election to defer a net experience loss; notice to Pension Benefit Guaranty Corporation; notice to plan participants and beneficiaries; notice to employers; no…
Treasury Decisions
  • T.D. 9732 Sep 28, 2015 — These final regulations provide guidance on the determination of minimum required contributions for single-employer defined benefit pension plans and also cont… (a)(b)(c)(f)(f)(1)(f)(2)
Announcements
  • Ann. 2006-70 Oct 2, 2006 — Minimum funding standards; alternative funding schedule election. This announcement describes how to make an election of an alternative funding schedule pursua…
Department of Labor (EBSA)
Proposed Rules
  • 81 FR 47534Proposed Jul 21, 2016 — Proposed Revision of Annual Information Return/Reports Comments due Oct 4, 2016 (c)(4)(B)(f)(4)
Final Rules
Tax Court (15) · DOL/Federal (0)
U.S. Tax Court (15)
Rulings that address this provision
Also cite this provision (8)
Private Letter Rulings (11)
Private Letter Rulings (11)
Rulings primarily about this provision
  • PLR 201928002 Jul 12, 2019 — Additional Tax UIL 4971.02-00, 4971.06-02 (b)
  • PLR 201620019 May 13, 2016 — Liquidity Shortfall UIL 4971.08-00
  • PLR 201550015 Dec 11, 2015 — Additional Tax UIL 4971.02-00 (b)
  • PLR 201542012 Oct 16, 2015 — Liquidity Shortfall UIL 4971.08-00
  • PLR 200935033 Aug 28, 2009 — Exclusive Benefit of Employees or Their Beneficiaries UIL 401.01-01, 4971.00-00
  • PLR 200118016 May 4, 2001 — Notification of Secretary of Labor UIL 4975.07-00 (d)
Also cite this provision (5)
  • PLR 201437022 Sep 12, 2014 — Minimum Funding Waiver UIL 412.06-00
  • PLR 200648028 Dec 1, 2006 — Definitions and Special Rules UIL 414.00-00 (e)(2)
  • PLR 200226001 Jun 28, 2002 — Tax on Reversion of Qualified Plan Assets to Employer UIL 4980.00-00
  • PLR 200109010 Mar 2, 2001 — Sale/Exchange UIL 4975.03-01, 4975.04-03 (b)
  • PLR 200005001 Feb 4, 2000 — Tax on Reversion of Qualified Plan Assets to Employer UIL 4980.00-00 (a)

Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Jan 4, 1995Jan 5, 1997USC 1994 ed., current through 1995-01-04 run 49Pub. L. 103-465View
Jan 6, 1997Jan 2, 2007USC 1996 ed., current through 1997-01-06 run 61Pub. L. 104-188View · Redline (sign in)
Jan 3, 2007Jan 7, 2008USC 2006 ed., current through 2007-01-03 run 102Pub. L. 109-280View · Redline (sign in)
Jan 8, 2008Jan 4, 2009USC 2007 ed., current through 2008-01-08 run 107Pub. L. 109-280View · Redline (sign in)
Jan 5, 2009Jan 4, 2015USC 2013 ed., current through 2014-01-16 run 13Pub. L. 110-458View · Redline (sign in)
Jan 5, 2015Jan 13, 2019USC 2014 ed., current through 2015-01-05 run 14Pub. L. 113-97View · Redline (sign in)
Jan 14, 2019currentUSC 2024 ed., current through 2025-01-06 run 1Pub. L. 115-141View · Redline (sign in)
Provision-level history (blame)