Success tax

Success tax

A 15% excise tax on "excess" distributions from tax-deferred retirement plans that was repealed by the Taxpayer Relief Act of 1997. In essence, the tax had penalized "successful" investors who accumulated large retirement accounts and took distributions that exceeded an annual limit deemed excessive by the tax code.

Success Tax

A tax formerly imposed on distributions from a retirement account in excess of a certain amount. If a retirement account's investments were particularly successful, the account holder has the ability to receive larger payments, depending on the nature of the account. The success tax discouraged this by levying a 15% surtax on payments deemed to be too large. It was repealed by the Taxpayer Relief Act of 1997.
References in periodicals archive ?
During the course of our conversation, he manages to invoke "the grave-robber's tax," "the Grim Reaper's tax," "the exit tax," "the departure tax," "the success tax," "the pine-box tax," "the heavenly repatriation tax," and--taste is no barrier in the fight for repeal--"the stiffest tax of all.
This grandfather amount may have an effect on the calculation of the success tax.
For 1997, 1998, and 1999, the success tax has been suspended for lifetime distributions but not for excess accumulations at death.
Because the lump-sum distribution was paid and taxed prior to her death, there is no success tax on the amount remaining in the after-tax personal fund.
Coupling this income tax advantage with the three-year suspension of the success tax, the client's generally conservative approach to investments, and his desire to retain his wife as the designated beneficiary made a compelling case for taxing the lump sum distribution currently.
Full browser ?