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#1 04.14.2012 10:11:15

Zoomboy
Legendarny Mistrz Forum
Od: USA
Zarejestrowany: 07.09.2007
Posty: 13193

Michigan IRA Withholding Changes

Substantial changes were made to Michigan individual income tax when on May 25, 2011, Governor Snyder signed into law Public Act (PA) 38 of 2011.

Effective January 1, 2012, Michigan Law now requires the administrators of pension and retirement benefits to withhold income tax payments that will be subject to tax. As described by the 2012 Pension Withholding Guide, pension and retirement benefits include most payments that are reported on a 1099-R for federal tax purposes, including IRA distributions and most payments from defined contribution plans. A link to the 2012 Pension Withholding Guide is available here.

What was the purpose of the tax restructuring legislation (PA 38 of 2011)?
The tax restructuring was completed to make Michigan more competitive economically by altering Michigan's business tax as well as to bring fairness and simplicity to the current tax structure.

When does the law go into effect?
January 1, 2012

Does this Michigan law impact both state and federally chartered credit unions?
Yes, the law applies to both state and federally chartered credit unions that open IRA accounts for members.

Where in the law is the requirement to withhold tax?
In section 703 (1) of Public Act 38 of 2011 it states:  A person who disburses pension or annuity payments is subject to income tax withholding on the taxable part of payments from an employer pension, annuity, profit-sharing, stock bonus, or other deferred compensation plans as well as from an individual retirement arrangement, an annuity, an endowment, or a life insurance company.

How much should be withheld?
To determine the withholding amount on IRA distributions, members can complete MI W-4P form.  In the absence of a MI W-4P, no withholding on benefits paid to members born before 1946 unless the benefits exceed the private pension limits. If the member was born in 1946 or after, withholding should be made on all taxable distributions at a rate of 4.35%.


That’s all, folks
Przekażmy sobie znak pokoju.
Hasta la vista, Vaya con Dios
Я возвращусь, Ich werde zurück sein, Je reviendrai, Estarei de volta, Θα είμαι πίσω, I červnu se zpět, Leszek vissza, وحقوق عودة

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