OP&F News

IRS using new versions of W-4P, W-4R for 2023 tax year

On January 3, 2022, the IRS posted a revised Form W-4P, Withholding Certificate for Pension or Annuity Payments, and new Form W-4R, Withholding Certificate for Non-periodic Payments and Eligible Rollover Distributions. The use of the revised forms was optional for the 2022 tax year, but will become mandatory for the 2023 tax year.

Current benefit recipients are not impacted by these tax changes. A benefit recipient who is already receiving benefits as of Dec. 31, 2022 will continue to receive the payment unchanged going forward unless a new W-4P is submitted. A new form is not required to be submitted.

The W-4P rules will apply to new benefit recipients or to anyone who wants to change their federal withholdings and submits a new W-4P to OP&F. In addition, the new form no longer allows payees to adjust the withholding amount using the number of allowances.

Prior to revision, payees used Form W-4P to tell payers the correct amount of federal income tax to withhold from taxable payments for periodic and non-periodic payments from pensions, profit-sharing, stock bonus, annuity, certain deferred compensation plans, individual retirement arrangements (IRAs) and commercial annuities, and eligible rollover distributions.

As revised, Form W-4P is used for taxable periodic pension and annuity payments, and new Form W-4R is used for taxable non-periodic payments and eligible rollover distributions. Basically, the old W-4P was split into two forms.

W-4P Instructions (periodic pension and annuity payments)

  • Steps 1 and 5 must be completed. Steps 2, 3 and 4 are optional.
  • Standard – To have the standard (default) amount of federal taxes withheld from each benefit payment, complete Steps 1 and 5, and OP&F will use the IRS tax tables to determine the amount of federal tax to be withheld.
  • Standard PLUS Additional Amount - If you want extra federal taxes withheld from each benefit payment in addition to the standard (default) amount, complete Step 4(c) and list a flat dollar amount of additional tax to be withheld.
  • Members may no longer list a total dollar amount to be withheld from each benefit payment. Instead, chose an option in Step 1(c) and list an additional amount in Step 4(c) to reach a total dollar amount to be withheld from each benefit payment.
  • No Federal Taxes Withheld - If you do not want any federal taxes withheld from each benefit payment, write “No Withholding” in the blank space below Step 4(c).

  • W-4R Instructions (non-periodic distributions)

  • Steps 1 and 2 must be completed.
  • For an eligible rollover distribution, the default withholding rate is 20%. You can chose a rate great than 20% by entering the rate on line 2. You may not chose a rate less than 20%.
  • Eligible Rollover Distributions:
  • Lump Sum Death Benefits
  • Partial DROP Distributions
  • Refunds
  • For non-periodic payments, the default withholding rate is 10%. You can chose to have a different rate by entering a rate between 0% and 100% on line 2.
  • Non-periodic Payments
  • Required Minimum Distributions
  • Withholding does not apply to:
  • Direct Rollover of eligible DROP distribution to another retirement plan or IRA

  • Please contact a tax professional for additional assistance completing these forms.

    Form W-4P

    Form W-4R

    Posted 1/19/2023

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