New W-4P Not Required Until 2023
The IRS has made changes to form W-4P and created a new form W-4R, but pension plans are not required to use the new forms in 2022.On March 12, 2021, the IRS released draft versions of withholding forms for pension and annuity payments. For many years, members who took periodic or nonperiodic distributions from pension plans filled out an IRS Form W-4P to indicate how much federal income tax to withhold from the distributions. The IRS is redesigning the W-4P for 2022 and adding a new Form W-4R that pension plans will be required to use. Going forward, the W-4P will be used for periodic payments and the W-4R will be used for nonperiodic payments. Those forms were updated again in November, 2021.
Per an announcement by the IRS on November 9, 2021, the IRS will postpone the requirement to begin using the redesigned forms until January 1, 2023. Payers should update their system programming for these new forms and are encouraged to begin using them in 2022 as soon as programming is in place but may otherwise continue to use the 2021 Form W-4P. Withholding tables for 2022 will work with both the 2021 Form W-4P and the 2022 Form W-4P. The 2021 Form W4P will no longer be available for use after December 31, 2022.