Payment of State Withholding Taxes

[Fred Payne]

One of the custodians we use for our plans will not make deposits to a state for withholding taxes on distributions as they will for Federal tax withholdings. This custodian will only issue a check payable to a state's Department of Revenue and send it to the Sponsor for the Sponsor to make the appropriate deposit and filing. That works OK when the state is the same state as the Sponsor and as an employer they are already making deposits to the state. But when the participant is now living in another state and wants state taxes withheld (or is required to have them withheld), the logistics become difficult.

Does anyone have a good solution for deposit of out-of-state withholdings?

Thanks.

[david rigby]

Have you contacted that state revenue department to ask them for procedures?

[Fred Payne]

I'm looking for an easier solution than having to research procedures for each state and having my client-sponsor being burdened with implementing multiple procedures for various states.

I recollect seeing some literature on a service that was available for handling distributions and payment of taxes.

[Guest halka]

Maybe a different custodian ??? Most have ability to track filing procedures in all states.

[Guest b2kates]

If the custodian is unwilling to make the actual deposit, how are you comforatble that they properly calculated the withholding?

You may want to consider a new payor/agent.

Many states assess liability on the employer when there is underwithholding.

roughly 11 states mandate withholding. One of the most aggressive states in enforcement is California.

would you care to share number of participants impacted?

Brett