W-4P and ADP Refund

For the past 20 years of ADP testing, when refunds are necessary, we provide the client with a form to give to the HCEs that explains the reason behind the refund, and a place for the HCE to make a withholding election.  The form offers them the choice of, 1)normal 10%, 2) a percentage or dollar amount over 10%, or 3) no withholding. 

The form also comes with a W-4P and option 3 includes instructions that if no withholding applies then the W-4P must be completed in addition to our form.

We then use this information to complete the recordkeeper's refund distribution form for the client.

We now have a recordkeeper that is insisting that for ANY withholding amount that is not 10%, they want a signed W-4P.  Additionally, if the participant wants, for example, 20% withholding, they want the participant to change the $ sign on line three to a % sign and indicate 10%, as that would be 10% additional to the normal 10%. Notwithstanding how confusing that would be for the participant.

They are insisting that the IRS requires W-4P not just to elect to be exempt, but for anything other than 10%.

I do not see anything in the instructions on the W-4P that requires the form to be used if a participant elects say 20% withholding, and do not see why our election form would not satisfy that purpose, especially since our form is much clearer in the instructions for the participant.

Do others require a W-4P in all situations? 

I do not mind changing our procedures if we are not doing it correctly, but just want to be certain first that we actually aren't doing it correctly.

Thanks!

Most of the rk's we deal with just have the withholding elections right on the form.

I think your form is fine and can be considered a substitute W-4P.  

Thanks for the confirm Bird. 

BG, most of the recordkeeper excess forms that we use do have a section to include withholding info, but those forms often do not require an ee's signature so we like to have a form that the ee signs with their election.