A benefit is being paid from a group annuity contract at an insurance company. Because we only have a PO Box for the participant, but do have a valid SSN, they say it is not a 'Legal Address' and must withhold 30%.

I reviewed the only reg I could find on topic - 1.1441-1(b)(3)(iii)© and found no support for the 30% withholding.

I also looked at 3405(e)(13) (no regs found) and still found no support for the 30% withholding.

Also a search of RIA using 'legal address' did not turn up anything useful.

Does anyone have support for the insurance company, or are we stuck with......

"Because I said so"

Sounds like the insurance company is going the easy route on a nonqualified lump distribution withholding.

I do not have my code available, have them cite the code section. It is my recollection that bonus type payments could be withheld at a flat 30%.

If this is a qualified plan/annuity withholding is governed by 3405, and yes there are regs - 35.3405

Sorry, I did not specify this was a distribution from a qualified plan.

Read what I could on 35.3405-1t and as I suspected it did not shed any light on the subject.

Still waiting to hear from the insurance company. Funny thing - when I challenged them on their original quote of 1.884-5 as authority, they would not talk to me, insisted on going through an intermdiary.

1.885-5 deals with Foreign Branch Operations - a far cry from a qualified plan distribution!

And I will not accept 'Cuz I said so'. My turn to demand a cite!