Friday, December 16, 2022

Watch for New IRS W-4P, W-4R Withholding Forms Available in Early 2023

Effective January 1, 2023, the IRS will split the current W-4P withholding form into two:

  • Form W-4P will be used only for periodic distributions (i.e., annuity or similar type payments). 
  • Form W-4R will be used for nonperiodic distributions (those payable on demand). Learn more about the new form on the IRS website.

Participants can now choose a federal withholding rate between 0–100% (instead of a minimum of 10%) to be applied to distributions, such as hardship distributions or required minimum distributions, that are not eligible for rollover into another retirement vehicle. Distributions eligible for rollover and paid to the participant are still subject to a mandatory 20% federal withholding rate, which can be increased by the participant.

By January 1, 2023, updates will be made to all distribution forms. The plan and employee websites will also be updated with W-4R withholding instructions, the new and revised forms, and new withholding rates, where applicable.