Form W-4R

The Form W-4R is an IRA distribution form used to withhold taxes on nonperiodic payments and eligible rollovers. This form is similar to Form W-4P but has a few additional fields. When a retiree receives a monthly pension payment or withdraws money from an investment account, it’s important to withhold a certain amount of federal income tax from the payout. This is because it will help the government with its revenue.

For those paying out IRA distributions, the new Form W-4R allows payees to choose their withholding rate between 0% and 100%, in whole percentages. At the same time, previously, they could only choose the default withholding rate of 10%. In addition, for IRA distributions that fall under the definition of a nonperiodic payment, plan sponsors can withhold at a higher rate than 10% by entering a higher percentage on line 2 of Form W-4R.

Is Form W-4R Mandatory?

Form W-4R is not mandatory for retirement plan participants who receive monthly benefit payments from the NHRS. However, if you are retiring on or after January 1, 2024, and you want to change your standard withholding from the employer, or if you wish to make any changes to your federal tax withholding elections, you must submit a new Form W-4R to OP&F at that time.

The IRS recently redesigned its tax withholding forms to match individual withholding instructions to federal income tax law changes. The redesigned forms include the updated Form W-4P, which relates to periodic payments, and the revised Form W-4R, which relates to nonperiodic payments (including eligible rollover distributions) made from an employer retirement plan, annuity, or an individual retirement arrangement.

Who is Eligible for Form W-4R?

To find out if you are eligible for the new Form W-4R or any other changes in federal tax withholding options, contact your employer’s human resources department. Or, you can use the free IRS online withholding estimator to get an idea of how much you might be able to save on your federal income tax bill. 

The best way to do this is to closely examine your past year’s tax return and pay stubs. Then, complete Form W-4R to see if it makes sense to change your withholding options. Then, you can be sure that you have the right amount of federal income tax withheld from your paycheck each payday.