Instructions For Forms 1099-R And 5498 - Distributions From Pensions, Annuities, Retirement Or Profit-Sharing Plans, Iras, Insurance Contracts, Etc. And Ira Contribution Information - 2016 Page 13

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that is paid to the recipient and includible in gross income.
Rather than Form W-4P, military retirees should
This includes the earnings portion of any nonqualified
give you Form W-4, Employee's Withholding
TIP
designated Roth account distribution that is not directly
Allowance Certificate.
rolled over. The recipient cannot claim exemption from the
Nonperiodic distributions. Withhold 10% of the taxable
20% withholding but may ask to have additional amounts
part of a nonperiodic distribution that is not an eligible
withheld on Form W-4P, Withholding Certificate for
rollover distribution. In most cases, designated
Pension or Annuity Payments. If the recipient is not asking
distributions from any IRA are treated as nonperiodic
that additional amounts be withheld, Form W-4P is not
distributions subject to withholding at the 10% rate even if
required for an eligible rollover distribution because 20%
the distributions are paid over a periodic basis. See
withholding is mandatory.
Regulations section 35.3405-1T, Q/A F-15. The recipient
Employer securities and plan loan offset amounts that
may request additional withholding on Form W-4P or
are part of an eligible rollover distribution must be
claim exemption from withholding.
included in the amount multiplied by 20%. However, the
actual amount to be withheld cannot be more than the
Failure to provide TIN. For periodic payments and
nonperiodic distributions, if a payee fails to furnish his or
sum of the cash and the FMV of property (excluding
her correct TIN to you in the manner required, or if the IRS
employer securities and plan loan offset amounts). For
notifies you before any distribution that the TIN furnished
example, if the only part of an eligible rollover distribution
is incorrect, a payee cannot claim exemption from
that is not a direct rollover is employer securities or a plan
loan offset amount, no withholding is required. However,
withholding. For periodic payments, withhold as if the
unless otherwise exempt, any cash that is paid in the
payee was single claiming no withholding allowances. For
distribution must be used to satisfy the withholding on the
nonperiodic payments, withhold 10%. Backup withholding
employer securities or plan loan offset amount.
does not apply.
Depending on the type of plan or arrangement, the
Box 5. Employee Contributions/Designated
payer or, in some cases, the plan administrator is required
Roth Contributions or Insurance Premiums
to withhold 20% of eligible rollover distributions from a
Enter the employee's contributions, designated Roth
qualified plan's distributed annuity and on eligible rollover
contributions, or insurance premiums that the employee
distributions from a governmental section 457(b) plan. For
may recover tax free this year (even if they exceed the
additional information, see section 3405(d) and
box 1 amount). The entry in box 5 may include any of the
Regulations sections 35.3405-1T, A-13; and
following: (a) designated Roth contributions or
31.3405(c)-1, Q/A 4 and 5. For governmental section
contributions actually made on behalf of the employee
457(b) plans only, see Notice 2003-20.
over the years under the plan that were required to be
Any NUA excludable from gross income under section
included in the income of the employee when contributed
402(e)(4) is not included in the amount of any eligible
(after-tax contributions), (b) contributions made by the
rollover distribution that is subject to 20% withholding.
employer but considered to have been contributed by the
You are not required to withhold 20% of an eligible
employee under section 72(f), (c) the accumulated cost of
rollover distribution that, when aggregated with other
premiums paid for life insurance protection taxable to the
eligible rollover distributions made to one person during
employee in previous years and in the current year under
the year, is less than $200.
Regulations section 1.72-16 (cost of current life insurance
protection) (only if the life insurance contract itself is
IRAs. The 20% withholding does not apply to
distributed), and (d) premiums paid on commercial
distributions from any IRA, but withholding does apply to
annuities. Do not include any DVECs, elective deferrals,
IRAs under the rules for periodic payments and
or any contribution to a retirement plan that was not an
nonperiodic distributions. For withholding, assume that
after-tax contribution.
the entire amount of a distribution from an IRA other than
a Roth IRA is taxable (except for the distribution of
Generally, for qualified plans, section 403(b) plans, and
contributions under section 408(d)(4), in which only the
nonqualified commercial annuities, enter in box 5 the
earnings are taxable, and section 408(d)(5), as
employee contributions or insurance premiums recovered
applicable). Generally, Roth IRA distributions are not
tax free during the year based on the method you used to
subject to withholding except on the earnings portion of
determine the taxable amount to be entered in box 2a. On
excess contributions distributed under section 408(d)(4).
a separate Form 1099-R, include the portion of the
An IRA recharacterization is not subject to income tax
employee's basis that has been distributed from a
withholding.
designated Roth account. See the Examples in the
instructions for box 2a, earlier.
Periodic payments. For periodic payments that are not
eligible rollover distributions, withhold on the taxable part
If periodic payments began before 1993, you are not
as though the periodic payments were wages, based on
required to, but you are encouraged to, report in box 5.
the recipient's Form W-4P. The recipient may request
If you made periodic payments from a qualified
additional withholding on Form W-4P or claim exemption
plan and the annuity starting date is after
from withholding. If a recipient does not submit a Form
!
November 18, 1996, you must use the simplified
W-4P, withhold by treating the recipient as married with
CAUTION
method to figure the tax-free amount each year. See
three withholding allowances. See Circular E, Employer's
Annuity starting date in 1998 or later, earlier.
Tax Guide (Pub. 15), for wage withholding tables.
-13-
Instructions for Forms 1099-R and 5498 (2016)

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