Income Tax Withholding on RMDs

Q. My company is distributing required minimum distributions (RMDs) to my client, and is withholding 20% of the amounts being distributed, despite the fact that my client elected “no withholding.” The company has told my client that it is mandatory that 20% in federal income tax be withheld on the RMDs. Is that correct?

A. No, that is not correct! The 20% mandatory federal tax withholding applies only to distributions that are eligible to be rolled over. Since RMDs can never be rolled over, there is no federal tax withholding required.

DNN Web Control Container