IRS Delays Effective Date for New Tax Withholding Forms W-4P and W-4R, Nov. 11, 2021

Back in March, the IRS released 2022 draft withholding forms for pension, annuity, and IRA payments. Starting in 2022, pension withholding elections were to be divided among two forms, Form W-4P and Form W-4R. The IRS has delayed the effective date to January 1, 2023—but encourages individuals to begin using these forms in 2022. Form W-4P will be used for withholding tax from periodic payments made from retirement plans and IRAs (the default withholding will be single, with no adjustments, if the taxpayer fails to provide an updated form). If the taxpayer is already receiving periodic payments, there's no need to submit a new form if the taxpayer doesn't wish to make any changes. Form W-4R will be used to withhold federal tax from certain rollover distributions and non-periodic payments. While the IRS updated information has not been finalized, plan sponsors should start planning ahead for the changes. For more information on withholding from benefit payments, see Q 3675.