State Withholding Requirements for Qualified Plan and IRA ...

1 Table 2: 2013 State Withholding Rates and Rate Calculations for Qualified Retirement Plan and IRA Plan Distributions NOTE: Use of the terms periodical and non-periodical is the same as defined for federal purposes under IRC '3405 and related federal regulations. Where there are special State applications to eligible rollover distributions (ERDs) as defined in IRC '3405 subject to federal Withholding at 20%, they are so noted in the table. 11102013 (replaces 11012013) DC updated to add link to FR 230. State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans. Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions.

2 Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority Alabama (as of 03/13/2013) Wage tables at In Alabama, payers may elect to treat distributions as wages and if elected compliance follows wage treatment. ADOR prefers that you use the tables for periodical payments and if so, an A-4 is needed from payee. In the alternative, payer can treat the payment as a supplemental wage and withhold 5% where no A-4 is 5% Withholding can be effected on a voluntary basis. Must have A4, Employee's Exemption Certificate, to use wage tables or withhold supplemental rate if agreed upon. If use periodical tables and receive an A-4, two Withholding exemptions have been added: "H" and "MS." "H" indicates an employee is single, has one or more qualifying dependents, and is claiming head of family. Withholding exemption "MS" indicates an employee is married, but filing a separate return.

3 "H" has the same value as the "M" exemption, and "MS" has the same value as the "S" exemption. A Withholding exemption #reg81037504 Alabama Department of Revenue Administrative Code See State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans. Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions. Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority required. of "0" indicates that no personal exemption is selected. A Withholding exemption of "S" indicates that a full personal exemption is selected.

4 A Withholding exemption of "M" indicates that personal exemptions for both spouses are being selected. [Rule ] Alaska No State income tax Arizona (as of 12/17/2012) Effective 7/1/2010, AZ adopted tables no longer tied to the federal Withholding rate. New rates to be elected on Form A-4P are: , , , , , , and Rates are to be applied to the taxable amount of distribution as reported in Box 2a of federal Form 1099-R. No Withholding permitted on non-periodic or other lump sum distribution. Effective7/1/2010, Withholding is a percentage of taxable amount of the distribution as reported in Box 2a of federal Form 1099-R and no longer a percentage of federal Withholding . New rates are to be elected by the payee on A-4P; A-4P needs to be on file to support Withholding . See current A-4P at 43-404; AZ Withholding Tax Ruling WTR 99-2.

5 Historical note: Each pension or annuity recipient electing Withholding when the change in Withholding regime occurred in 2010 were required to file a revised Form A-4P to elect a new Withholding percentage and take into consideration the change in the Withholding base. Notifications of the changes were required to be provided to payees. See Table 3. State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans. Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions. Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority Prior to the change, Withholding was a percentage of federal Withholding .

6 Rates decreased from 2009 for 1/1/2010 through 6/30/2010 to: , , , , or of federal tax withheld as specified on A-4P. After 6/30/2010, new A-4Ps were required and new designated percentages applied. Rates from 5/1/2009 through 12/31/2009 were: , , , , or of federal tax withheld as specified on A-4P. Arkansas (as of 10/04/2013) Must use wage tables. Under current law, specific dollar amounts cannot be designated unless as an additional amount to be withheld on line 5 of AR4P. If 3% of taxable amount for IRAs and other non-periodical payments unless ERD. 5% for all ERDs (direct distributions that would be eligible for rollover) 3% for IRAs and other non-periodical distributions; 5% for ERDs Arkansas allows annuitants who receive benefits from an employment-related annuity plan or Qualified IRA distribution to exempt the first $6,000 of benefits received.

7 Must submit AR 4P to claim exemption. Current employer guide and tables are dated 12/7/1998. See at Arkansas Act 1309 of 2005 adopting IRC 3405; 26-51-918; State of Ark. Employee's Exemption Certificate for Pensions and Annuities. State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans. Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions. Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority payee fails to submit AR4P, the payer must withhold on periodic payments as if payee was married claiming three Withholding allowances.

8 The agency has announced that Withholding tables will change for 2014 and 2015 to accommodate recent rate changes. See comment column. May not elect out of Withholding if recipient of ERD, or with address for payment outside the or its possessions, or if a nonresident alien. If payee submits an AR4P that fails to contain a correct taxpayer identification number (TIN), the payer must withhold as if payee is single claiming zero Withholding allowances even if they choose not to have State income tax withheld. See instructions to AR 4P. Withholding formula for periodicals is available at Wage tables are at and for low income at . State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans.

9 Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions. Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority For when to use the low income tables see instructions to AR 4P. The following tax rates become effective in 2015 except for the lowest rate which will be effective in 2014: $0 to $4,099 of net income: ; $4,100 to $8,199 of net income: ; $8,200 to $12,199 of net income: ; $12,200 to $20,399 of net income: ; $20,400 to $33,999 of net income: ; and $34,000 or more of net income: Inflation-adjustments are part of the legislation. In addition, the Arkansas personal income tax standard deduction is increased from $2,000 to $2,200 per taxpayer for tax years beginning after 2014.

10 [ 1585 and (Act 1488), 2013] The agency has announced that Withholding tables will change for 2014 and 2015 State Periodical Calculation Applies to periodical payments from QRPs, life insurance contracts, commercial annuities, and endowment contracts. QRPs include IRC '401(a), including '401(k), '403(a) and (b), and governmental '457 plans. Nonperiodical Calculation Applies to nonperiodical payments such as lump sums from QRPs, life insurance contracts, commercial annuities, and endowment contracts, and to all taxable IRA distributions. Minimum Percentage Rate Minimum Dollar Amount Comments Authority with Hyperlink Other Authority California (as of 11/01/2013) California allows 3 different Withholding options: (1) 10% of the amount of the computed federal Withholding tax; (2) California wage Withholding tables using DE 4P allowances; or (3) A designated dollar amount as requested by the participant on DE 4P.