Form for Late 1099 Withholding

[Guest]

If the mandatory 20% withholding has not been done for a payout to a participant, how is the withholding (plus a 10% penalty) paid to the IRS? 8109? 945-V? I haven't been able to find the answer in the instructions or in Section 11 of Circular E. If I use 945-V, how will the IRS determine that that a portion of the money is for a penalty?

Thanks,

David

[Richard Anderson]

I'm unclear on the facts. If the mandatory 20% was not withheld; who is paying the withholding that you are asking about? When is it being paid?

[Guest]

The employer should have done the withholding and sent the payment to the IRS in October. Instead, the participant received 100% of the distribution. The employer will pay the withholding now, issue a 1099 showing the amount withheld and be reimbursed by the participant.

[Richard Anderson]

I don't think I would deposit the withholding until the employer received it from the employee. What if the employer made the withholding deposit and then the employee refused to reimburse?

If the withholding is deposited now, you should follow the same proceedure as if it was withheld at the time of distribution. Deposit the withholding along with Form 8109-B; and file Form 945 by the end of February.

If the 10% you are referring to is the 10% penalty for early withdrawal, that is not required to be withheld; but if more than 20% is withheld by participant election, there is no need to specify that a portion of what was withheld is for the 10% penalty. The total amount withheld will be applied toward the individual's total tax liability when he or she files their 1040.

[Guest]

The 10% penalty I'm referring to is the IRC Section 6656 penalty for failure to timely deposit. The employer is a monthly depositor and the withholding was due in October.

[QDROphile]

The employer is not a proper payer of qualified plan distributions. The trust is the payer and has the obligation to withhold. Make sure you get the basics straight before you go on to the more difficult issues.

[Lynn Campbell]

If the amount of tax that should be withheld happens to be less than $1,000, you may deposit that amount along with Form 945.

[Guest]

The 10% late deposit penalty will be assessed on the basis of the schedule for liability filed as part of Form 945.

As stated it is the plan's obligation which should make the deposit, not the employer.

[Guest]

Thanks for the responses.