Baker Spindler Holtz                                  CPAs and Advisors
New Michigan Withholding Requirements for Pension and Retirement Benefits

                                                      January 23, 2012
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Baker Spindler Holtz is located in the heart of downtown Grand Rapids.  We have been providing quality service to our clients for over three decades. 

Michigan's income tax treatment of pension and retirement benefits changed significantly effective January 1, 2012.  Generally, administrators are now required to withhold Michigan tax from pension and/or annuity payments.  Withholding is required on distributions from defined benefit plans, from traditional IRAs, and on most defined contribution plans including 401(k) and 403(b) plans.

 

Administrators are asking recipients to complete Form W-4P, Withholding Certificate for Michigan Pension or Annuity Payments, so the proper amount can be withheld.  For all recipients of qualifying payments, you should have recently received this form in the mail.  If you have not received a form, please contact us and we can help facilitate the process.

 

You may opt out of withholding tax from your pension and annuity benefits if you believe you will not have a balance due on your Michigan tax return.  However, failure to have sufficient tax withheld from your pension and/or annuity payments may result in a balance due on your Michigan tax return as well as penalty and/or interest.

 

For more information, please see the following link to the Department of Treasury's website:

 

http://www.michigan.gov/documents/taxes/2012_Pension_Withholding_Guide_365268_7.pdf

 

Please contact us if you have questions regarding Michigan withholding on pension and retirement benefits.

 

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