IRA Federal Tax Withholding

[Guest mporterst]

My question is two-fold. First, does the Interal Revenue Code allow custodians to withhold between 0% and 10% on IRA distributions? If no, what is the authority?

The Form WP-4 allows a shareholder to elect 10%, 0%, or greater than 10%....is this the only authority? IRC Section 3405 does not address this issue.

[Guest mporterst]

To be more specific....I am talking about non-periodic IRA distributions. Thanks.

[jevd]

ALl IRA payments since they are Demand Payments are considered non-periodic and are threfore subject to the 10% withholding rate; See 35-3405-1T Q & A F-15 below.

F-15. Q. How is withholding applied to a designated distribution from an individual retirement account (IRA) described in section 408(a) that is payable upon demand even though payments are scheduled to be made over a period certain greater than one year?

A. Distributions from IRAs that are payable upon demand are not periodic payments taxable under section 72 because they do not constitute annuity contracts within the meaning of section 408(d)(2). Therefore, designated distributions from an IRA that are payable upon demand are treated as nonperiodic distributions subject to withholding at the 10% rate even if the distributions are paid over a period certain