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W-4R Experience

yogibearbullyogibearbull
in Other Investing
The new W-4R requirements are working smoothly now.

Default fed tax w/h for withdrawals are 20% from 401k/403b, 10% from T-IRAs. I wanted more tax w/h to avoid paying Est Tax (which is also a simple online process), so that kicked in new W-4R.

There were early reports of required paper filings of W-4R. But now everything is online. My experiences at 3 brokerages:

Fido (403b) Rep just asked verbal OK to complete a new W-4R for me. However, Fido insists that MY plan requires phone call, so no online processing.

TIAA (403b) allowed online editing of the w/h % without any thing additional. It's assumption seems to be that changing % is in effect completing a new W-4R.

Vanguard (T-IRA) required online completion and signature of a new W-4R.

In all cases, I could designate a specific fund to take all withdrawals - default is proportional withdrawals. So, if you do this via phone, speak up early, or choose "custom" option online. At least at Fido I learned a few years ago that if you mention this late in the call, the Rep had to cancel and start over - that is irritating to both the Rep and the customer.

Comments

  • hank
    edited June 2023
    I assume you can still “decline” any withholding on Traditional IRAs when executing a withdrawal online?
  • yogibearbullyogibearbull
    edited June 2023
    Yes, you can decline for T-IRA, but not for 401k/403b. Then, the rules may require estimated tax payment in the relevant quarterly period.
  • catch22catch22
    edited June 2023
    Hi @yogibearbull Thank you for this interesting infomation.
    but not for 401k/403b. Then, the rules may require estimated tax payment in the relevant quarterly period.
    I/we may be having dinner with a retired teacher tomorrow. I don't know whether she rolled her 403b to a T-IRA, but if not; she required to set a percentage of her RMD that is taxed? Do I understand this correctly??? What if she takes her RMD in December for the whole year, non-periodic? I know she doesn't need the money through the year.
    Our house takes RMD's from T-IRA's in December and we play with how much FED and STATE tax we want removed depending on our estimate of how much we will owe from taxable sources through the tax year. Our goal is to be about even in taxes paid versus taxes owed.
    AND I hope the stinky air in your area is getting better. The air in mid-Michigan again today has a very strange taste and smell. Definitely not an outside work day. The smell is a bit inside our house today. The smoke is supposed to start to leave for awhile sometime Thursday.
    Thank you.
    Catch
  • yogibearbullyogibearbull
    Feds have 20% MANDATORY tax w/h from 401k/403b EXCEPT for direct-rollovers/transfers. So, any amount withdrawn from 401k/403b for any other purpose (for RMDs, expenses, even manual rollovers) will have 20% fed tax w/h. The option via W-4R is to INCREASE w/h, but not to reduce or skip (permissible for T-IRAs).
  • Derf
    @catch22 :
    "Our house takes RMD's from T-IRA's in December and we play with how much FED and STATE tax we want removed depending on our estimate of how much we will owe from taxable sources through the tax year. Our goal is to be about even in taxes paid versus taxes owed."
    I usually do the same , wait until the last two months of the year & take my RMD.
    Over the last three years refund $995 owe $317 refund 1011 from Fed Taxes .
    I believe the year I owed Mr. Vanguard had some rather unexpected CG's !
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