New Withholding Form to Be Used for 2022
The IRS has made available a 2022 tax year draft Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, and indicates that the form will be split into two forms. Form W-4P will continue to be used, but only to withhold federal income tax from periodic retirement plan and IRA payments. Periodic payments are installment payments at regular intervals generally over a period of more than one year.
A 2022 tax year draft of new Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions, has also been released and will be used for nonperiodic and rollover distributions beginning in that tax year. Nonperiodic distributions are subject to a 10 percent withholding rate unless a different rate is elected. Eligible rollover distributions are subject to a mandatory 20 percent withholding rate on the taxable amount of the distribution unless a higher rate is elected. A revised draft of Form W-4R is expected to be made available shortly.