IRS Issues 2020 Form W-4P

The IRS has issued an updated 2020 Form W-4P. The 2020 Form W-4P is substantially similar to the 2019 Form in that withholding from periodic pensions and annuities continues to be determined based upon a payee's marital status and withholding allowances.

As stated in IRS Publication 15-A, "[w]ithholding from periodic payments of a pension or annuity is generally figured in the same manner as withholding from wages. However, it doesn’t matter if the Form W-4P is from before 2020 or is a 2020 Form W-4P. In either case, for the appropriate computational method to figure federal income tax withholding on periodic payments, see section 5 of Pub. 15-T." IRS Publication 15-A, Employer's Supplemental Tax Guide, p. 23. Thus, retirement systems should continue to use the withholding tables under Section 5 of IRS Publication 15-T, Federal Income Tax Withholding Methods, with any new 2020 Form W-4P submitted.

Further, a payee is not required to complete a new Form W-4P. If a payee does not complete a 2020 Form W-4P, the previously filed Form W-4P will remain in effect. If a payee does not provide a correctly completed Form W-4P, the retirement system should withhold as if the member is married and claimed three allowances.
For more information, contact Audra Ferguson-Allen, Rob Gauss, Lisa Harrison, Lindsay Knowles, Tara Sciscoe, Chris Sears, or the Ice Miller Employee Benefits attorney with whom you work.

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.