Guest Ashlea Posted January 10, 2005 Posted January 10, 2005 We have a MDR from a profit sharing plan. First, they have to have a minimum withholding of 10% correct? Second, the distribution occured in Dec 2004, when does the withholding have to be sent in by? January 15th? Or January 31st? Thank you!
Guest Ashlea Posted January 10, 2005 Posted January 10, 2005 I am sorry it should have been RMD. This is a one time shot. The only distribution of the plan year and less the $4,000. Thanks
Harwood Posted January 10, 2005 Posted January 10, 2005 10% is the default withholding rate for a RMD; it is not mandatory. The withholding is up to the Participant. For deposit schedules, check out the Form 945 Instructions at http://www.irs.ustreas.gov/pub/irs-pdf/i945.pdf
Guest Ashlea Posted January 10, 2005 Posted January 10, 2005 Thank you for your response. I have determined that they would be considered a monthly depositor, but I just need to know if it is due by the 15th of the month following or the 31st?
Harwood Posted January 10, 2005 Posted January 10, 2005 It looks like the 15th of the following month. Check Publication 15 - Circular E - to be sure.
Guest Ashlea Posted January 10, 2005 Posted January 10, 2005 I did and it talks about 941 - so I guess we just assume that it is the same. I was just looking for something to say that withholdings from qualified plans deemed 945 were due by _____. But I will go with the 15th to be safe - thanks again!
Guest TAG Posted January 10, 2005 Posted January 10, 2005 Ashlea, The 15th is correct. Remember, there could be state withholding as well...... depends on which state. TAG
Guest Ashlea Posted January 10, 2005 Posted January 10, 2005 Yes, I will keep that in mind - thank you very much for your responses!
GBurns Posted January 10, 2005 Posted January 10, 2005 Pub 15 Circular E Section 11 usually in the third paragraph with bold type discusses "Separate deposit requirements for nonpayroll (Form 945) tax liabilities" Note the caveat regarding the $2500 threshold regarding accuracy, if applicable. Neither qualified plans nor withholdings from qualified plans are deemed 945. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
Harwood Posted January 10, 2005 Posted January 10, 2005 "Neither qualified plans nor withholdings from qualified plans are deemed 945." If withholdings from Qualified Plan Distrubutions aren't reported on a 945, where are they reported?
Guest TAG Posted January 10, 2005 Posted January 10, 2005 GBurns, Okay, I'll bite - where are you going with this? TAG
GBurns Posted January 10, 2005 Posted January 10, 2005 I wasn't going anywhere unless you think that plans etc are "deemed 945". Witholdings from Qualified plans along with certain other nonpayroll items are reported on Form 945. Reporting has nothing to do with being deemed. Being reported on a form does not make anything deemed. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
could be me maybe not Posted January 10, 2005 Posted January 10, 2005 Ashlea, why did you withhold federal income taxes on a MRD in the first place?
J2D2 Posted January 10, 2005 Posted January 10, 2005 My recollection is that federal income tax withholding is mandatory, but, for any distribution that is not an eligible rollover distribution (such as an MRD/RMD), the payee may waive withholding.
could be me maybe not Posted January 11, 2005 Posted January 11, 2005 Methinks it (FEDERAL taxes) is voluntary if not an eligible rollover distribution (subject to state rules). If that is not correct, I'd welcome correction. I think it is correct. Again I ask why Ashlea withheld FEDERAL taxes.
Belgarath Posted January 11, 2005 Posted January 11, 2005 Agree with J2D2 - For a nonperiodic payment that is not an eligible rollover distribution (such as this) the withholding rate of 10% is mandatory UNLESS the participant elects out of it. So it is voluntary in a sense, but the withholding is the mandatory default. See IRC 3405(b).
Guest TAG Posted January 11, 2005 Posted January 11, 2005 I agree with J2D2- Lump sum nonperiodic RMDs are subject to 10% withholding unless the participant elects no withholding using form W4-P. See 3405(b)(1) TAG
Guest Ashlea Posted January 11, 2005 Posted January 11, 2005 As I understand it, it is the participants choice and he chose to have FEDERAL taxes withheld. Thanks.
GBurns Posted January 11, 2005 Posted January 11, 2005 I was not aware that there was any way to elect that 10% or any particular % be withheld on a W-4P. The 10% rate is when the person DOES NOT CHOOSE to have no withholding. If as you posted "he chose to have FEDERAL taxes withheld" then there would withholding at rates that very likely would not be 10%. In any case I do not see that he could have chosen 10%. George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
jevd Posted January 11, 2005 Posted January 11, 2005 G Burns Check bottom page 3 of instructions for 2005 W4-P Nonperiodic payments—10% withholding. Your payer must withhold at a flat 10% rate from nonperiodic payments (but see Eligible rollover distribution—20% withholding on page 4) unless you choose not to have federal income tax withheld. Distributions from an IRA that are payable on demand are treated as nonperiodic payments. You can choose not to have income tax withheld from a nonperiodic payment by submitting Form W-4P (containing your correct TIN) to your payer and checking the box on line 1. Generally, your choice not to have income tax withheld will apply to any later payment from the same plan. You cannot use line 2 for nonperiodic payments. But you may use line 3 to specify an additional amount that you want withheld. Caution. If you submit a Form W-4P that does not contain your correct TIN, the payer cannot honor your request not to have income tax withheld and must withhold 10% of the payment for federal income tax. JEVD Making the complex understandable.
GBurns Posted January 11, 2005 Posted January 11, 2005 Isn't that what I said? George D. Burns Cost Reduction Strategies Burns and Associates, Inc www.costreductionstrategies.com(under construction) www.employeebenefitsstrategies.com(under construction)
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