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Withholding options under W-4P

Guest David G

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Guest David G

It appears that many governmental plans permit an annuitant to withhold a flat dollar amount for income tax withholding from his or her annuity. However, Form W-4P and its instructions require that if the annuitant wants income tax to be withheld that he or she must designate withholding allowances on the W-4P and may have an additional flat amount withheld. The instructions say that "current law" does not permit you to only specify a flat amount.

Any theories as to why a flat withholding amount is apparently not permitted except as an additional amount? Are plan adminstrators familar with this provision and have they decided not to offer a flat dollar amount for withhholding?

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