mandatory withholding

[Guest mikeak]

Participant elects Level Income annuity from DB plan. They will recieve payments for 7 years, benefit then reduces to $0. Are distributions subject to 20% mandatory withholding (considered < 10 year periodic payment)?

I have a cite referring to PLR 9429026 indicating yes, but I'd like to read the PLR. So the second question is: where can I do that?

[Mary Kay Foss]

The 20% mandatory withholding applies to payments that could be rolled over but are not. Generally periodic payments are subject to voluntary withholding which uses the same rules as someone receiving wage or salary payments.

I have my PLRs on a disc because I subscribe to a Tax Analysts service. I understand there are ways to retreive PLRs on the web but I'm uncertain of the procedure. Good luck!

[Appleby]

PLR 9429026 is attached

PLR_9429026.doc

[Guest mikeak]

Appleby, thanks. The PLR is clear that in the scenario I described above the distribution is considered an eligible rollover. Additionally, in the speific case in this PLR the opinion is that the additional 10% penalty under 72(t) applies since the recipient separated from service at age 50. I wonder if this opinion is utilized much by TPA's in communicating distribution options in similar situations.