deadline to change withholding percentage from RMD for federal taxes

Submitted by star pollack on Sat, 2019-11-23 05:22

As written in forum “Withholding from any source” 2018-10-22. I only learned about this recently. I immediately called the NYC Teachers Retirement System because if I have 90% of my RMD withheld, that will cover my federal taxes for the year and I won’t have the penalty for not sending in quarterly estimated taxes. The person I spoke to said I was too late to do that- that I would have had to notify them in April. That makes no sense to me. Is that correct? .



Submitted by William Tuttle on Sat, 2019-11-23 13:24

This is entirely up to the particular plan, but the FAQ on the TRS website says;

  • May I change my withholding elections?Yes. You may elect a new rate by filing an online election through the secure section of our website or by filing a Withholding Certificate for Pension or Annuity Payments (W-4P) with TRS.Please note that, if you have a permanent home address outside of the United States, Internal Revenue Service (IRS) regulations prohibit you from electing to have no federal income tax withheld from your retirement benefits.Your withholding election would generally take effect approximately two to six weeks after TRS receives your online W-4P filing, or approximately two months after TRS receives your paper form.

Submitted by Alan - IRA critic on Sat, 2019-11-23 16:32

Note that many IRA custodians allow IRA withholding elections to be changed at the time of distribution, but of course you probably would not roll this plan over because NYS exempts the entire pension distribution from NYS income taxes whereas IRA distribution subtractions in NYS are limited to 20k.

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