State Withholding Form

[emmetttrudy]

For a Defined Benefit Plan distribution, is there a requirement to provide a state withholding election form to the participant with the distribution packet of information? For many states state tax withholding is not mandatory and those who choose to voluntary elect it are few and far between. Just wondering if we can simplify the packet of information and remove this form altogether.

[david rigby]

You can search these Message Boards and find several prior discussions on this topic.

IMHO, it's a good thing to offer state tax withholding, but those who administer very small plans may disagree. (If it's a large trustee/bank who writes the check, the inclusion of state withholding should be a no-brainer.)

[mbozek]

For a Defined Benefit Plan distribution, is there a requirement to provide a state withholding election form to the participant with the distribution packet of information? For many states state tax withholding is not mandatory and those who choose to voluntary elect it are few and far between. Just wondering if we can simplify the packet of information and remove this form altogether.

I have a problem with how a state can require a plan to provide information on withholding if the plan has no nexus or presence in that state. For example, if a plan that is sited in NY pays benefits to a resident of Kansas how can Kansas requre the plan to withold income tax and submit taxes to the state tax authority?