Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 316 - PERSONAL INCOME TAX GENERAL PROVISIONS › Section 150-316-0305 - Withholding Income Taxes on IRAs, Annuities, and Compensation Plans

Current through Register Vol. 63, No. 7, July 1, 2024
(1) The withholding
			 of income taxes from commercial annuities, employer deferred compensation
			 plans, and individual retirement plans is mandatory. However, an individual may
			 elect, under certain circumstances, to have no withholding of income taxes.
			 Such an election will remain in effect until revoked by the
			 individual.
(2) An individual may
			 not make an election to have no withholding of income taxes from the amount of
			 a payment from a plan which is wages as defined in ORS
			 316.162. Therefore, an
			 individual may not make an election if the individual is receiving payments
			 from an employer deferred compensation plan as defined in IRC 457 or a
			 nonqualified plan under IRC 403 if the contributions to the plan or payments
			 from the plan are wages.
(3) The
			 payer of any periodic payment must withhold income taxes as if the payment were
			 wages using the withholding tables prepared and furnished by the department.
			 The exemptions for state withholding purposes will be the same as listed on
			 federal Form W-4P. If no withholding election form has been filed by the payee,
			 the withholding status is single and the number of exemptions is
			 zero.
(4) The payer of any
			 nonperiodic distribution must withhold income taxes from such a payment at a
			 rate of eight percent of the amount of money or the fair market value of other
			 property received in the distribution.
(5) The minimum amount of income tax
			 withholding per payee must be no less than 10 dollars per distribution. The
			 payer is not required to determine benefits subject to Oregon tax when figuring
			 income tax withholding.
(6) If an
			 individual has elected to have no federal income tax withholding from payments
			 or distributions, there must be no state income tax withholding unless the
			 individual notifies the payer, in writing, otherwise.
(7) The payer must provide a form to each
			 payee, prior to the first periodic payment, which must explain the payee's
			 right to elect to have no income tax withheld. A completed form must be
			 returned to the payer no later than 30 days after the mailing date. If the
			 payee does not elect out of income tax withholding, it is the payee's
			 responsibility to provide the payer with a completed Form W-4P which properly
			 reflects the income tax withholding needed for Oregon purposes. If a completed
			 Form W-4P is not provided, the payer must withhold income taxes as directed in
			 sections (3) to (5) of this rule. A separate election form must be provided to
			 the payee prior to each nonperiodic distribution. The election form must be
			 returned to the payer no later than 30 days but can be returned as early as
			 necessary to meet the date of distribution. If a completed form is not
			 returned, the payer must withhold income tax at the established rate. The payer
			 may use federal Form W-4P or a form that includes the same information as the
			 Form W-4P.
(8) The payee may revoke
			 the election to have income tax withholding or may change the amount of income
			 tax withholding. The payee must send a written request to the payer using
			 federal Form W-4P or an appropriate form furnished by the payer. The revocation
			 or change will be effective within 45 days after receipt by the
			 payer.
(9) The payer must be
			 considered an employer and subject to the same income tax withholding rules as
			 are imposed under ORS
			 316.162 to
			 316.212 for withholding of
			 income taxes from wages. The department must provide appropriate forms,
			 instructions and an account identification number necessary for reporting and
			 remitting payments.
Publications: Contact the Oregon Department of Revenue for
				  information about how to obtain a copy of the publication referred to or
				  incorporated by reference in this rule pursuant to ORS
				  183.360(2) and
				  ORS 183.355(1)(b).
Statutory/Other Authority: ORS
				  305.100
Statutes/Other Implemented: ORS
				  316.189