August 17, 1992
TO: PENSION COMMITTEE NO. 32-92
RE: VIRGINIA RULINGS ON PENSION WITHHOLDING
__________________________________________________________
Attached are copies of two rulings by the Commissioner of
the Virginia Department of Taxation relating to Virginia’s
recently enacted pension withholding provision. (See Institute
Memorandum to Pension Committee No. 10-92, dated February 18,
1992.) As we previously advised, this provision was amended to
exempt payments from individual retirement plans (IRAs) and
simplified employee pensions (SEPs). (See Institute Memorandum
to Pension Committee No. 16-92, dated April 22, 1992).
Ruling P.D. 92-33 explains the options available to
financial institutions that withheld from payments from IRAs and
SEPs prior to this amendment. First, the institution may refund
to the recipient the amount of tax withheld and claim a credit
for the amount of the tax refunded on subsequent withholding
returns or apply for a refund. Second, the institution may remit
to the Department of Taxation amounts already withheld and show
the amount on the recipient’s Form 1099 at the year end. Third,
the institution may offer voluntary withholding to recipients of
IRA or SEP payments.
Ruling P.D. 92-58 states that withholding is not required
for retirement benefits when paid to individuals who no longer
are domiciliary or actual residents of Virginia.
We will keep you informed of further developments.
Kathy D. Ireland
Associate Counsel - Pension
Attachments
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