January 10, 1992
TO: PENSION COMMITTEE NO. 2-92
RE: IOWA PENSION WITHHOLDING REQUIREMENT
__________________________________________________________
As we recently informed you, Iowa has enacted a requirement
that state income tax be withheld from pensions, annuities and
other similar periodic payments to persons whose primary
residence is in Iowa, if federal withholding applies. (See
Institute Memorandum to Pension Committee No. 33-91, dated
October 29, 1991.) Attached is a copy of the Iowa Department of
Revenue and Finance Withholding Information newsletter, which
states that the withholding rate is five percent.
The newsletter also clarifies that no withholding will be
required when payment amounts or taxable amounts fall below
certain thresholds, when payments are not subject to Iowa income
tax, or when no federal income tax withholding is required. The
payee may elect Iowa withholding, however, even if no federal
withholding is required.
We will keep you informed of developments.
Kathy D. Ireland
Associate Counsel - Pension
Attachment