72(t) / Form W-4P
L1: 72(t) / Form W-4PShould customers that take 72(t)2 SEPP’s fill outForm W-4P?2009-07-08 14:30, By: cia08, IP: [126.96.36.199]
L2: 72(t) / Form W-4PYes.
You will eithercomplete the “official” IRS Form W-4P or a “substitute form” which is part of the IRA Distribution Form from your custodian. In either case you are simply telling the custodian to either withhold Federal and / or State taxes from your distribution amounts or not withhold taxes. Any amount withheld for taxes will be reported on your IRS Form 1099-R which you will receive early in the next year.
P.S. DO NOT consider tax withholding when calculating your SEPP Distribution amount! Withholding is simply a down payment on your final tax bill which is calculated the next year when you do your taxes.2009-07-08 15:07, By: Jim, IP: [188.8.131.52]
L3: 72(t) / Form W-4PW-4P. OK, well this is the first time I’ve heard of that on the forum. I don’t understand why I would have to use it, because with Fidelity, they said you just withdraw your funds electronically over the web and have them sent to your bank account, and in the process the system will ask you how much you want to have withheld for taxes.
The form W-4P sounds like it is used for IRA custodians that set up an automatic SEPP for you. With Fidelity, they don’t have anything to do with your SEPP. Is that the difference we’re talking about here?2009-07-09 13:34, By: mikex, IP: [184.108.40.206]
L4: 72(t) / Form W-4P”… and in the process the system will ask you how much you want to have withheld for taxes.”
When you fill out the distribution request online and you answer the question referenced above, then you have completed the “substitute Form W-4P.” In today’s mode of operation, rarely is an “official form W-4P” completed.
Focus on getting the SEPP Plan design correct and properly completing the online process with Fidelity and you’ll be just fine. Quit looking for a form W-4P.
Jim2009-07-09 13:45, By: Jim, IP: [220.127.116.11]
L4: 72(t) / Form W-4PIt is merely provides an indication to the custodian as to the amount you want withheld from each payment.
Someplace along the way, you may have actually completed it (or a similar form from Fidelity)requesting no withholding on non-periodic distributions.
Some companies will request one with each non-systematic withdrawal – it really depends on the company.2009-07-09 13:46, By: Gfw, IP: [18.104.22.168]
L5: 72(t) / Form W-4PRegardless of how the IRA custodian approaches it, unless you are subject to backup withholding, withholding on any IRA distribution is entirely optional, and so is the percentage, although a default percentage of 10% applies if you do not decline withholding.
There HAS been a couple posters here over the last couple years had plans potentially busted over withholding miscommunication between themselves and the custodian. If this happens in December, it can be fatal. As such, even though withholding is safe enough when everyone communicates effectively, it is somewhat safer to decline it and pay through quarterly estimates or another withholding source outside the 72t IRA.
But also note that withholding is considered received by the IRS equally throughout the year regardless of when paid, while estimates are only credited when actually paid.
2009-07-09 21:55, By: Alan S., IP: [22.214.171.124]