A plan sponsor partiicpant is taking an in service distribution on a quarterly basis.
He asked how the withholding should be handled.
As far as I see it, the income of course is taxed as ordinary income and with regard to withholding it should be handled just like any W-2 income (except no FICA taxes). I think this is something that is in the domain of their CPA (or payroll provider for that matter) not their pension professional.
Does my opinion seem reasonable? Better ideas?
Thanks.
Full Version: Pension distributions
QUOTE (Gary @ Feb 12 2010, 04:42 PM) 
the income of course is taxed as ordinary income and with regard to withholding it should be handled just like any W-2 income (except no FICA taxes).
I concur. It's an installment payment regardless of whether monthly or quarterly. And in-service vs post-service doesn't alter that. I'm assuming it's an age 59 1/2 or older participant (ie no early withdrawl penalty nor restriction on distribution of deferrals)?
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