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Tax withholding on distribution to minor/dependent.


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For a QDRO distribution to a minor/dependent, the Participant is responsible for paying the taxes on the distribution.  By default, the Plan Administrator will increase the QDRO distribution by 10% as a tax withholding.  However, we also give the Participant the option of foregoing the additional 10% distribution as tax withholding by filling out a Form W-4R, in which case the Participant is responsible for the taxes outside the Plan.

We had a participant request to have the QDRO distribution increased by 25% as a tax withholding.  Is this allowed?

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By what authority is the administrator increasing the amount that the order says to pay? The plan‘s written procedures should require in situations where the alternate payee is not the spouse or former spouse  specificity in the amount that is to be withheld and how it relates to the amount awarded to the alternate payee. An order that fails to state the amounts, including withholding, should fail to qualify.

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