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Withholding on payouts of terminated employees.

Guest Dan Gould

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Guest Dan Gould

We annually "liquidate" accounts of former employees. We give them a choice of receiving cash (minus the 20% withholding) or a rollover to another shelter they provide us the account information about.

It is my understanding that there is a dollar amount below which it is not necessary to withhold the the 20%. What is that dollar amount?


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For federal withholding, the table starts at $200.

The following link will take you to a table summarizing the state requirements. Click on State Withholding Information Sheet.

But beware, it is out of date.


I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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