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Fillable Printable Information Sheet: Withholding From Pensions, Annuities, And Certain Other Deferred Income (De 231P)

Fillable Printable Information Sheet: Withholding From Pensions, Annuities, And Certain Other Deferred Income (De 231P)

Information Sheet: Withholding From Pensions, Annuities, And Certain Other Deferred Income (De 231P)

Information Sheet: Withholding From Pensions, Annuities, And Certain Other Deferred Income (De 231P)

WITHHOLDING FROM PENSIONS, ANNUITIES, AND CERTAIN OTHER DEFERRED
INCOME
TAXABLE PAYMENTS
Pensions, annuities, and other deferred income as
described in Section 3405 of the Internal Revenue Code
are considered wages and subject to the withholding of
Personal Income Tax (PIT). However, a payee/recipient
may elect NOT to have PIT withheld.
Payments to Out-of-State Residents
Federal law prohibits states from taxing retirement
income received by nonresident individuals after
December 31, 1995.Therefore, no California income
tax is to be withheld from pension recipients who reside
outside of California.
To determine a payee’s state of residence, the payer may
rely on the most recent address of the payee contained
in its business records.
WITHHOLDING NOTICE
The payer must provide to each payee, not earlier than
six months before distribution of the first payment and
not later than the time of the first payment, a notice with
the following rights:
(a) To elect not to have withholding apply to any
payment or distribution and how to make that
election.
(b) To change or revoke an election and when it takes
effect.
The election and any change or revocation of an elec tion
is effective for payments made more than 30 days after
the payer receives the election or revocation unless the
payer elects to make it effective at an earlier date. For
non‑periodic payments, the payee may make or revoke
an election at any time before the distribution.
Withholding Elections
A payee may name the number of allowances, decide
how much is to be withheld, or elect not to have
withholding for periodic or non‑periodic (including lump
sum) payments.To do so, the payee files with the payer a
Withholding Certificate for Pension or Annuity Payments
(DE 4P or federal Form W‑4P) or a substitute form pro‑
vided by the payer. Such choice remains in effect until
revoked or changed by the payee by filing a new election
form. However, the election on non‑periodic payments
is on a payment‑by‑payment basis unless the payer
decides to make the election permanent.
When PIT withholding is required, the payer may
calculate the PIT using one of the methods shown below:
(a) California Withholding Schedules.
(b) A designated dollar amount as requested by the
recipient.
(c) Ten percent of the amount of federal withholding
computed pursuant to Section 3405 of the Internal
Revenue Code.
If the payee has not filed a withholding form (DE 4P or
Form W‑4P), PIT withhold ing is required.The payer may
calculate PIT using one of the following methods:
(a) Using the California Withholding Schedules, treating
the payee as a married individual claiming three
allowances.
(b) Withholding 10 percent of the amount of federal
withholding computed pursuant to Section 3405
of the Internal Revenue Code.
At the payer’s option, withholding will not be required
with respect to any designated distribution if the amount
to be deducted and withheld is less than $10.
DE 231P Rev. 8 (1-11) (INTERNET)Page 1 of 2 CU
Form 1099-R
At the end of the year, the payer shall give each
individual a Form 1099‑R showing the gross payments
and the income tax withheld during the year.
Reporting of California PIT Withheld
Payers are required to:
(a) File a Quarterly Contribution Return and Report of
Wages (DE 9).
(b) File a Quarterly Contribution Return and Report of
Wages (Continuation) (DE 9C), listing the pension
recipient’s social security account number, name,
and PIT withheld on the DE 9C each quarter. Do
not report the amount of the payment/distribution as
either total subject wages or PIT wages.
(c) File a Payroll Tax Deposit (DE 88) along with the
PIT withheld from the pension payments.The
payers’ filing date is dependent on both their federal
deposit schedule and the amount of accumulated
PIT withheld during the quarter. Please refer to
the current year’s California Employer’s Guide
(DE 44) “California Deposit Requirements” section,
to determine if/when the payer must deposit PIT
withheld more frequently than quarterly. If PIT is
overpaid and overreported in a quarter, refer to the
DE 44 “Correcting Payroll Tax Deposits” section to
properly make the necessary adjustments.
Separate Reporting Account Number
The payer may request a separate account number to
report California PIT withheld from the taxable portion
of payments of pensions, annuities, and certain other
deferred income.This separate account number for
reporting withholdings may be obtained by submitting a
completed Registration Form for Employers Depositing
Only Personal Income Tax Withholding (DE 1P) to the
Employment Development Department (EDD).
ADDITIONAL INFORMATION
For further assistance, please contact the Taxpayer
Assistance Center at (888) 745‑3886 or visit the nearest
Employment Tax Office listed in the DE 44 or access
EDD’s Web site at www.edd.ca.gov/Office_Locator/.
The EDD is an equal opportunity employer/program.
Auxiliary aids and services are available upon request
to individuals with disabilities. Requests for services,
aids, and/or alternate formats need to be made by calling
(888) 745‑3886 or TTY (800) 547‑9565.
This information sheet is provided as a public service and is intended to provide nontechnical assistance. Every attempt has
been made to provide information that is consistent with the appropriate statutes, rules, and administrative and court decisions.
Any information that is inconsistent with the law, regulations, and administrative and court decisions is not binding on either the
Employment Development Department or the taxpayer. Any information provided is not intended to be legal, accounting, tax,
investment, or other professional advice.
DE 231P Rev. 8 (1‑11) (INTERNET)Page 2 of 2
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