20% Federal Income Tax Withholding

[Andy the Actuary]

It is not uncommon for employers sponsoring plans with few participants to write paper checks for lump sum distributions at the federal income tax withholding. We are likely to have:

Proposed Regulations Expand the Use of Electronic Payment System and Discontinue Paper Coupons Next Year

WASHINGTON — Consistent with a Financial Management Service initiative announced in April of this year, the IRS today issued proposed regulations to significantly increase the number of electronic transactions between taxpayers and the federal government.

The proposed regulations (REG 153340-09) would eliminate the rules for making federal tax deposits by paper coupon because the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010. The proposed regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS).

Any guesses whether or not the EFTPS will apply to pension payments. As an aside, I looked at the website and it appears the only way say to make estimated taxes is to provide the IRS with your personal checking/savings account routing number.

[Bird]

I've been trying to figure this out. I did see Form 945 referenced, so I think it will apply to pension payments. I saw that there is some kind of exception for less than $2,500 (which would take care of most of our situations), but couldn't find if that was still to be deposited on an 8109 or with the 945. Most of the articles cutely say "throw out those 8109 coupons!"