Retirement insights from a Colorado PERA perspective

Legislation & Governance

IRS to Begin Using Updated Form W-4P and New Form W-4R in 2023

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Editor’s note: PERA expects to have the updated withholding form available in mid-December. PERA retirees who are signed up for e-delivery will receive an email newsletter when the form is available.


The IRS is implementing some changes to tax withholding forms in 2023 that could affect retirees who receive benefit payments from plans like Colorado PERA.

Background

In 2020, the IRS began requiring employers to use a new version of Form W-4, which employees fill out to tell their employer how much to withhold from their paychecks. The updated form was a result of the Tax Cuts and Jobs Act of 2017, which made a number of significant changes to tax law, including eliminating personal exemptions. Instead of using complicated worksheets and declaring a number of withholding allowances, employees now fill out the form with the relevant information, and employers calculate the appropriate amount of tax to withhold.

The updated form is intended to ensure employers withhold a more accurate amount from workers’ paychecks. The result is fewer people who either owe money to the IRS or who receive large refunds at tax time.

Updated W-4P and new W-4R

Following the tax code changes from the Tax Cuts and Jobs Act and the updated W-4 form, the IRS is also updating Form W-4P, which is used to determine tax withholdings for pension and annuity accounts.

While the old form covered both one-time distributions and recurring payments, there are now two forms. Form W-4P is only for recurring payments such as monthly PERA benefit payments, while Form W-4R is for one-time or lump-sum distributions such as refunds or rollovers.

Like the W-4, the W-4P form no longer allows tax filers to adjust their withholdings by electing a specific number of withholding allowances. Instead, the W-4P form has new input fields for increasing or decreasing the amount to withhold, including fields for tax credits and deductions.

What the changes mean for PERA retirees

PERA retirees and benefit recipients who are currently receiving ongoing PERA benefit payments and who do not wish to make changes to their federal tax withholding elections are not required to file a new form. However, PERA recommends completing a new W-4P form for 2023 to ensure the appropriate tax amount is withheld. 

If a filer makes no changes to their federal tax withholding elections, PERA will use the IRS method to bridge their tax table elections over to the new methodology as of January 1, 2023. This bridging, in most cases, will adjust their withholding accordingly. If a person’s current election is to withhold zero federal tax, a flat dollar amount tax or flat percentage tax, those elections will remain the same, but may be incorrect withholding amounts under the new IRS guidelines, which is why PERA recommends submitting the new W-4P form for 2023.

PERA anticipates retirees and benefit recipients will be able to update their tax withholding elections online and by paper forms in mid-December 2022 for changes to take effect January 1, 2023.

Please note that PERA cannot provide tax advice, including advice about how to complete these forms. If you have questions about your particular situation, please contact a tax or legal advisor.

For more information on taxes and PERA benefits, visit copera.org.

Comments

  1. Barb Haaland-Michaels says:

    I hope you will send out an email when the new W4P is available online.

    • charles senig says:

      Send info when available

    • Laurel Dunn says:

      In the third paragraph from the bottom click on “online and by paper forms” and when you get to that screen open the drop down screen that’s titled “Retirement” and the form can be clicked on there to open and print.

  2. Danny L Ackerman says:

    Seems like every time I get ready to make a touchdown some idiot moves the goal post!

  3. Sandra K McInerney says:

    Please send information when the new W4P form is available and where to go online to file it. Thank you.

  4. Martha Lytle says:

    Please send an email when the new form is ready

  5. Jane Kay Annese says:

    Please send me the information on the new form as I will need assistance in
    doing this from my accountant.

  6. Audrey Williamson says:

    Please send a notice when we will receive the new W4P form on paper. I will also need the information on the new form in order to get assistance from our accountant.

  7. Mary Lou Brandebery says:

    Like everyone else I want you to notify us with a e-mail when form is available with copy form we can return.

  8. George S Larkin says:

    Please send the new form in an Email that we can print out.
    Thanks for the update PERA is the best a keeping us retired folks up to date
    Thank you.

  9. David Schutte says:

    For those of us who know how much to have taken out for Federal taxes, will we still be able to say how much to take? I have done this for years so that I we be close to zero for a return or further payment. Less Government!!!!!

    • David Schutte says:

      sorry for the spelling. “so that I will be”

    • PERA On The Issues says:

      Hi David, if you don’t wish to make any changes to your current withholding, you’re not required to submit a new form. So if you’re having a flat dollar amount or percentage withheld, you can continue to do so. If, however, you want to change that amount in the future, you will have to submit a new form, which will use the new methodology to calculate your withholding going forward.

    • Debra Blesh says:

      me too

  10. Linda Burnett says:

    Please send a notice when we will receive the new W4P form on paper. I will also need the information on the new form in order to get assistance from our accountant.

  11. Pixel Chi says:

    I file quarterly because of other income. Do I understand you correctly that there is no change required for quarterly filers?

    • PERA On The Issues says:

      The updated W-4 forms don’t change anything related to when you file your taxes, only how much PERA withholds from your monthly benefit payments. If you don’t wish to make any changes to your withholding, you’re not required to take any action.

  12. Marilyn A Anderson says:

    Plz contact me when new forms are available so I can confer with my accountant. Thanks

  13. Gordon Kaufman says:

    Many thanks for the current IRS tax changes. I appreciate the efforts to keep PERA members informed and updated.

  14. Mike Casey says:

    Please send information when this is available. Thanks.

  15. Cheryl Morris says:

    I have additional income therefore, some years I’m owed money and some years I’ve paid. Does the new form have any adjustments if we are not completely retired?

    • PERA On The Issues says:

      Hi Cheryl, yes, the updated form has fields for adjustments due to income from a job or other sources.

  16. Sheila Hatch says:

    Please send an email when this is available..Thanks!

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