The new Internal Revenue Service (IRS) Form W-4R helps retirement account owners determine the appropriate federal withholding rate for nonperiodic payments and eligible rollover distributions.
The IRS now allows an account owner to elect a federal withholding rate from 1% to 9% for nonperiodic payments that are not eligible rollover distributions (e.g., hardship withdrawals and required minimum distributions), in addition to being able to opt out, select the default 10% rate, or select a rate greater than 10%.
We’ve incorporated this IRS update into our online distribution processes, and it will be incorporated into our distribution forms in early 2023. We’ll continue to accept forms that don’t contain Form W-4R components; however, we may require our updated forms in the future. If so, we’ll provide additional communication to you.
What’s not changing:
- If no federal withholding election is made, we will continue to withhold 10% for non-eligible rollover distributions.
- Eligible rollover distributions will remain subject to 20% federal withholding if not directly rolled over.
To learn more about Form W-4R, visit the IRS website or call us at (800) 421-6019.