26 U.S.C. § 3405
Special rules for pensions, annuities, and certain other deferred income
The payor of any periodic payment (as defined in subsection (e)(2)) shall withhold from such payment the amount which would be required to be withheld from such payment if such payment were a payment of wages by an employer to an employee for the appropriate payroll period.
An individual may elect to have paragraph (1) not apply with respect to periodic payments made to such individual. Such an election shall remain in effect until revoked by such individual.
Any election under this subsection (and any revocation of such an election) shall take effect as provided by subsection (f)(3) of section 3402 for withholding allowance certificates.
In the case of any payment with respect to which a withholding allowance certificate is not in effect, the amount withheld under paragraph (1) shall be determined under rules prescribed by the Secretary.
The payor of any nonperiodic distribution (as defined in subsection (e)(3)) shall withhold from such distribution an amount equal to 10 percent of such distribution.
An individual may elect not to have paragraph (1) apply with respect to any nonperiodic distribution.
Paragraph (1)(B) shall not apply to any distribution if the distributee elects under section 401(a)(31)(A) to have such distribution paid directly to an eligible retirement plan.
For purposes of this subsection, the term “eligible rollover distribution” has the meaning given such term by section 402(f)(2)(A).
Except as provided in paragraph (2), the payor of a designated distribution (as defined in subsection (e)(1)) shall withhold, and be liable for, payment of the tax required to be withheld under this section.
The term “periodic payment” means a designated distribution which is an annuity or similar periodic payment.
The term “nonperiodic distribution” means any designated distribution which is not a periodic payment.
The term “employer deferred compensation plan” means any pension, annuity, profit-sharing, or stock bonus plan or other plan deferring the receipt of compensation.
The term “commercial annuity” means an annuity, endowment, or life insurance contract issued by an insurance company licensed to do business under the laws of any State.
The term “plan administrator” has the meaning given such term by section 414(g).
The maximum amount to be withheld under this section on any designated distribution shall not exceed the sum of the amount of money and the fair market value of other property (other than securities of the employer corporation) received in the distribution. No amount shall be required to be withheld under this section in the case of any designated distribution which consists only of securities of the employer corporation and cash (not in excess of $200) in lieu of financial shares. For purposes of this paragraph, the term “securities of the employer corporation” has the meaning given such term by section 402(e)(4)(E).
If the payor has more than 1 arrangement under which designated distributions may be made to any individual, each such arrangement shall be treated separately.
Any election and any revocation under this section shall be made at such time and in such manner as the Secretary shall prescribe.
The payor of any nonperiodic distribution shall transmit to the payee notice of the right to make any election provided in subsection (b) at the time of the distribution (or at such earlier time as may be provided in regulations).
Any notice transmitted pursuant to this subparagraph shall be in such form and contain such information as the Secretary shall prescribe.
The terms “withholding”, “withhold”, and “withheld” include “deducting”, “deduct”, and “deducted”.
Except as provided in subparagraph (B), in the case of any periodic payment or nonperiodic distribution which is to be delivered outside of the United States and any possession of the United States, no election may be made under subsection (a)(2) or (b)(2) with respect to such payment.
Section 301(d) of the Tax Reduction Act of 1975, referred to in subsec. (d)(2)(B)(iii), is section 301(d) of Pub. L. 94–12,
2017—Subsec. (a)(3). Pub. L. 115–97, § 11041(c)(2)(F), substituted “allowance” for “exemption”.
Subsec. (a)(4). Pub. L. 115–97, in heading, substituted “allowance” for “exemption” and in text, substituted “allowance” for “exemption” and “shall be determined under rules prescribed by the Secretary” for “shall be determined by treating the payee as a married individual claiming 3 withholding exemptions”.
2001—Subsec. (c)(3). Pub. L. 107–16, § 641(a)(1)(D)(ii), reenacted heading without change and amended text of par. (3) generally. Prior to amendment, text read as follows: “For purposes of this subsection, the term ‘eligible rollover distribution’ has the meaning given such term by section 402(f)(2)(A) (or in the case of an annuity contract under section 403(b), a distribution from such contract described in section 402(f)(2)(A)).”
Subsec. (d)(2)(B)(iv). Pub. L. 107–16, § 641(a)(1)(D)(iii), added cl. (iv).
2000—Subsec. (e)(1)(B). Pub. L. 106–554 inserted “(other than a Roth IRA)” after “individual retirement plan” in concluding provisions.
1996—Subsec. (e)(12). Pub. L. 104–188 substituted “(b)(2)” for “(b)(3)” in closing provisions.
1992—Subsec. (a). Pub. L. 102–318, § 521(b)(36), substituted “Periodic payments” for “Pensions, annuities, etc.” in heading.
Subsec. (a)(1). Pub. L. 102–318, § 522(b)(2)(A), substituted “subsection (e)(2)” for “subsection (d)(2)”.
Subsec. (b)(1). Pub. L. 102–318, §§ 521(b)(37)(A), 522(b)(2)(B), substituted “subsection (e)(3)” for “subsection (d)(3)” and “an amount equal to 10 percent of such distribution” for “the amount determined under paragraph (2)”.
Subsec. (b)(2), (3). Pub. L. 102–318, § 521(b)(37)(B), redesignated par. (3) as (2) and struck out former par. (2) which related to amount of withholding.
Subsec. (c). Pub. L. 102–318, § 522(b)(1), added subsec. (c). Former subsec. (c) redesignated (d).
Subsec. (d). Pub. L. 102–318, § 522(b)(1), (2)(C), redesignated subsec. (c) as (d) and substituted “subsection (e)(1)” for “subsection (d)(1)” in par. (1). Former subsec. (d) redesignated (e).
Pub. L. 102–318, § 521(b)(40), substituted “(b)(2)” for “(b)(3)” in par. (13)(A).
Pub. L. 102–318, § 521(b)(39), amended par. (8) generally. Prior to amendment, par. (8) read as follows: “The maximum amount to be withheld under this section on any designated distribution shall not exceed the sum of the amount of money and the fair market value of other property (other than employer securities of the employer corporation (within the meaning of section 402(a)(3))) received in the distribution. No amount shall be required to be withheld under this section in the case of any designated distribution which consists only of employer securities of the employer corporation (within the meaning of section 402(a)(3)) and cash (not in excess of $200) in lieu of fractional shares.”
Pub. L. 102–318, § 521(b)(38), struck out par. (4) which defined “qualified total distribution” and provided special rule for accumulated deductible employee contributions in determining qualified total distribution.
Subsecs. (e), (f). Pub. L. 102–318, § 522(b)(1), redesignated subsecs. (d) and (e) as (e) and (f), respectively.
1988—Subsec. (d)(13). Pub. L. 100–647, § 1012(bb)(2)(C), substituted “United States or its possessions” for “United States” in heading.
Subsec. (d)(13)(A). Pub. L. 100–647, § 1012(bb)(2)(A), substituted “the United States and any possession of the United States” for “the United States”.
Subsec. (d)(13)(B)(i). Pub. L. 100–647, § 1012(bb)(2)(B), amended cl. (i) generally, substituting “or a resident alien of the United States” for “who is a bona fide resident of a foreign country”.
1986—Subsec. (d)(1)(B). Pub. L. 99–514, § 1102(e)(1), inserted last sentence for “For purposes of clause (ii), any distribution or payment from or under an individual retirement plan shall be treated as includible in gross income.”
Subsec. (d)(1)(B)(iii), (iv). Pub. L. 99–514, § 1875(c)(10), reenacted cl. (iii) relating to amounts subject to withholding under subchapter A of chapter 3 as cl. (iii) and reenacted cl. (iii) relating to distribution described in section 404(k)(2) as cl. (iv).
Subsec. (d)(13). Pub. L. 99–514, § 1234(b)(1), added par. (13).
1984—Subsec. (b)(2)(C). Pub. L. 98–369, § 714(j)(1), substituted “nonperiodic distribution” for “distribution described in subparagraph (B)” and “subparagraph (A) or (B) (as the case may be) shall be applied by taking into account” for “the Secretary, in prescribing tables or procedures under paragraph (1), shall take into account”, designated phrase “which is made by reason of a participant’s death” as cl. (i) and added cl. (ii).
Subsec. (d)(1)(B)(iii). Pub. L. 98–369, § 714(j)(4), added cl. (iii) relating to amounts subject to withholding under subchapter A of chapter 3.
Pub. L. 98–369, § 542(c), added cl. (iii) relating to distributions described in section 404(k)(2). Directory language that section (d)(1)(B) be amended by striking out “and” at end of cl. (i) and substituting “, or” for the period at end of cl. (ii) could not be executed in view of prior amendment by section 714(j)(4) of Pub. L. 98–369, which struck out “and” at end of cl. (i) and substituted “, and” for the period at end of cl. (ii).
Subsec. (d)(8). Pub. L. 98–369, § 714(j)(5), freed from withholding requirement any designated distribution which consists only of employer securities of the employer corporation (within the meaning of section 402(a)(3)) and cash (not in excess of $200) in lieu of fractional shares.
Subsec. (d)(12). Pub. L. 98–369, § 722(h)(4), added par. (12).
Amendment by Pub. L. 115–97 applicable to taxable years beginning after
Amendment by Pub. L. 107–16 applicable to distributions after
Amendment by Pub. L. 106–554 effective as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 1(a)(7) [title III, § 314(g)] of Pub. L. 106–554, set out as a note under section 56 of this title.
Amendment by section 521(b)(36)–(40) of Pub. L. 102–318 applicable to distributions after
Amendment by section 522(b)(1)–(2)(C) of Pub. L. 102–318 applicable, except as otherwise provided, to distributions after
Pub. L. 100–647, title I, § 1012(bb)(2)(D),
Amendment by section 1102(e)(1) of Pub. L. 99–514 applicable to contributions and distributions for taxable years beginning after
Pub. L. 99–514, title XII, § 1234(b)(2),
Amendment by section 1875(c)(10) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Amendment by section 542(c) of Pub. L. 98–369 applicable to taxable years beginning after
Amendment by section 714(j)(1), (4), (5) of Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title.
Amendment by section 722(h)(4)(A) of Pub. L. 98–369 applicable to payments or distributions after
Pub. L. 97–248, title III, § 334(e),
For provisions directing that if any amendments made by subtitle B [§§ 521–523] of title V of Pub. L. 102–318 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after