The interest rates on overpayments and underpayments are unchanged from the fourth quarter of 2020 (Rev Rul. 2020-28). The rates are:
The 3% rate is used to figure estimated tax penalties for individuals for the first quarter of 2021 and also the first 15 days of April.
A 20% withholding rule applies to nonperiodic distributions, such as lump-sum distributions, paid directly to employees from an employer plan.