Distributions from qualified retirement plans are subject to a mandatory 20% withholding unless the funds are directly transferred to another retirement plan or IRA. However, other types of retirement plan distributions are subject to different mandatory withholding rules, or you can opt for voluntary withholding.
Periodic payments. For distributions payable over more than 1 year, such as pension benefits, you can choose between mandatory withholding based on wage withholding tables or your own withholding. This can be at a different rate or a specific amount of additional tax for each payment.
Nonperiodic payments. For distributions such as IRA distributions payable on demand, a mandatory 10% withholding applies unless you elect not to have any withholding taken from the payment.
You’ll need to complete Form W-4P to put alternative withholding into effect.
A recent survey shows that many taxpayers fail to take the job-related expenses to which they are entitled. For example, 38% failed to claim moving expenses when they relocated for a job. Half did not know they could deduct travel costs to see clients. And only 23% claimed education expenses to which they were entitled.View all factoids