The IRS has revised Form W-4P (Withholding Certificate for Periodic Pension or Annuity Payments) and Form W-4R (Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions). The new forms change the federal tax withholding elections available and the withholding calculation that determines the amount to be withheld from pensions and eligible rollover payments.
One note for the W-4P form is the elimination of the option to select a specific number of withholding allowances. The new form provides fields for adjusting the amount to withhold, including tax credits and deductions.
MainePERS retirees and beneficiaries who already receive ongoing payments and do not wish to make changes to their federal tax withholding elections are not required to file a new form.
How is the new W-4P federal tax withholding form different from the prior form?
Prior tax withholding calculations for periodic pension payments were based on filing status (married or single) and number of withholding allowances as indicated on the federal tax withholding form. The new calculation includes an additional filing status, “head of household,” and eliminates the use of withholding allowances. The new form provides fields to adjust the amount to be withheld by including other income, deductions, and tax credits into the calculation.
The new form and calculation, if completed correctly, should more accurately determine the amount of tax due at the end of the year.
Does a new W-4P form need to be filed if I do not intend to change my tax withholding elections?
No. Anyone receiving ongoing benefits does not need to complete a new form. Your withholding will continue based upon the elections and withholding allowances MainePERS has on file.
Should a retiree or beneficiary decide to change their withholding after January 1, 2023, then the new W-4P form must be completed.
If I make no changes to my federal tax withholding elections, will my federal tax withholding amount stay the same?
If no changes are made to your federal tax withholding elections, we will continue to use the marital status, number of withholding allowances, and any additional withholding amount we have on file to calculate your withholding. However, the actual amount withheld may change slightly due to a difference in rounding as we transition from the current monthly tax withholding tables to the new annual tax withholding tables.
Additionally, your federal tax withholding may also change when tax tables are updated annually or when your benefit amount changes.
Is it possible to update my filing status or additional amount to be withheld without changing the number of withholding allowances?
After January 1, 2023, withholding allowances will no longer be used to calculate federal tax withholding. When a new W-4P form is filed after January 1, 2023, any existing withholding allowances will no longer be used, and the federal tax withholding will be calculated using the new method.
You may want to consult the instructions and worksheets on IRS Form W-4P (Withholding Certificate for Periodic Pension or Annuity Payments) at irs.gov to assist you in completing the form. If you need further assistance in filing a new Form W-4P or adjusting your withholding, please consider contacting your tax preparer or advisor.
Is there more information about this change in withholding?
Yes, see IRS Publication 15-T at irs.gov for more information.
Some members approaching retirement age have received emails at work that mention MainePERS and offer to help with retirement benefits. Recently they have come from the email address [email protected] and say at the bottom of the email that they are from Fed Resource of San Diego, CA. Please know that these emails have no association with MainePERS, and MainePERS neither works with the firms sending these emails nor endorses them. These sort of contacts typically come from business organizations that seek to make money by providing services to you or referring you to another business for a fee from that business.
We can answer any questions about the retirement benefits MainePERS administers for you.
For health/dental insurance questions, please contact the administrator of your insurance program. View a list of contacts and phone numbers of health insurance administrators of programs under which members are covered here.
Have You Moved To Another State?
Are you a Maine retiree who recently changed residency to another state? Do you have Maine State income tax withheld from your monthly pension payment?
If you are no longer a Maine resident and would like to stop the state withholding deduction, complete form CL-0905 (Non-Resident Certification for Maine Tax Withholding), sign and send it to us.
Form CL-0905 is available on our website by clicking here or you may all us to have one mailed to you.
If you regularly move between two (or more) addresses (e.g. a winter and summer address), we no longer require written address change forms each time you move between those addresses. Once we have each of your addresses in our records, when you move between them, simply call or e-mail us with the effective date of the change. We will follow up to your request by sending confirmation letters to both addresses. If any of your established addresses change, you will need to update the address with us, either by submitting a change form or calling to give us the information.
Annual Notice of Right to Elect or Revoke Federal Tax Withholding
To All MainePERS Retirees:
Recipients of an employer pension are entitled to choose not to have income tax withheld from their payments, or to change their withholding election. You can do this by completing and submitting a new form W-4P to us indicating your choice. The form is available on the IRS website by clicking here.
Please note that even if you elect not to have federal income tax withheld, you are still responsible for the payment of federal income tax on the taxable portion of your monthly benefit. You may also be subject to tax penalties under the estimated tax payment rules if your payments of estimated taxes or withholdings are not enough to satisfy your federal tax liability.