New Jersey withholding on pension distributions

[Bird]

I'm old enough to not remember if I posted this before, but...has anyone successfully set up a withholding program for New Jersey state taxes? (Like EFTPS where we do it on behalf of the client.)

I actually had one client who figured things out and did it themselves. And I think I had someone from the state on the phone once who said "sure it's easy, you just need Form blah blah and Form yada yada and Form xyz and Form abc and Form pqr to cover all of them", or something like that.

American Funds used to say that they couldn't, but I think they (and others) can do it now.

I just sent a question through their "contact us" section of the website, but I shudder at the thought of what I might get back, if anything.

Anyway, you get the idea - is there an equivalent to EFTPS for NJ?

(For the uninitiated, NJ says that plans must withhold state taxes if requested. We've made it very difficult to request on our forms but recently had a couple of people who outsmarted us and wrote a separate note.)

[BG5150]

I am in a similar situation.

[jpod]

Why wouldn't a state law that imposes an obligation on an ERISA-governed plan be preempted by ERISA?

[Lou S.]

(For the uninitiated, NJ says that plans must withhold state taxes if requested. We've made it very difficult to request on our forms but recently had a couple of people who outsmarted us and wrote a separate note.)

LOL

Sorry I can't help you with NJ withholding, we have very few east coast participants.

[david rigby]

Why wouldn't a state law that imposes an obligation on an ERISA-governed plan be preempted by ERISA?

Discussed before. Might be reasonable to assume that preemption applies, but it also might be reasonable to avoid a fight.

[mbozek]

I have never understood how a state can force a non resident entity such as a retirement plan to withhold taxes on a resident of that state. Seems like there are no minimum contacts by the plan with the state that would require tax withholding.

In addition preemption should preclude mandatory withholding of state income tax.

If a plan that is sited in another state does not withhold NJ income tax on distributions what is NJ going to do to it?

Just because a state demands that a non resident comply with its tax laws doesn't mean that the non resident is subject to state tax law.

[Bird]

fyi they replied and, not surprisingly, told me (vaguely) how to submit taxes when I withheld them as a payor. (Of course the link they gave me was broken but I figured it out.) I wrote back and said "you didn't answer my question - can I withhold and submit for various plans?"

Rather surprisingly, I got an immediate answer: "It is the payor's responsibility to handle the withholdings and the reporting on the 1009-R."

IOW "no."

So unless a plan sponsor wants to register individually, there will be no withholding for NJ state taxes in my shop.