Anticipating Changes to Form W-4P for 2020

The Internal Revenue Service ("IRS") has issued a draft revised Form W-4, Employee’s Withholding Certificate, to reflect changes to the tax laws under the Tax Cuts and Jobs Act of 2017 ("TCJA"), but it has not yet announced any proposed revisions to Form W-4P, Withholding Certificate for Pension or Annuity Payments. Employers should continue to use the current Form W-4P pending possible changes for calendar year 2020.

WHAT DO I NEED TO KNOW?

Recipients of pension or annuity benefits use the Form W-4P to elect and change withholding on their periodic and non-periodic payments. Recipients may elect not to have income tax withheld from retirement payments (except for eligible rollover distributions). An election remains in effect until the recipient makes changes or revokes his or her election.

The IRS has released two draft revisions to the 2020 Form W-4, most recently on August 2, 2019. These draft revisions incorporate changes from the TCJA that will make the form easier to understand and help minimize administrative burdens on employers.

The draft revisions to the Form W-4 do not mention any changes to the Form W-4P.   With only a few months remaining in 2019, even if the IRS does release and finalize changes to Form W-4P for 2020, employers and record keepers will have only a short time to update their administration.
 
WHAT DO I NEED TO DO?

Employers should continue to use the current Form W-4P until the IRS announces revisions to the Form W-4P for 2020.

If you have any questions or comments regarding the Form W-4P, or the withholding of taxes in general, please contact Gary Blachman, Kathleen Sheil Scheidt, Audra Ferguson-Allen, Melissa Proffitt, Tara Sciscoe, Sara Funke, Austin Anderson, or your Ice Miller LLP Employee Benefits attorney.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.