2012 Pension Withholding Guide Released…
October 14, 2011
The amendments to the Michigan Income Tax Act that were signed into law by the Governor on May 25, 2011 included significant changes to the tax treatment of retirement and pension distributions. The State published a chart that details the changes based on the age of the retiree.
Effective January 1, 2012, Michigan’s tax treatment of pension and retirement benefits will change and these benefits will be subject to income tax for many recipients. Michigan law now requires the administrators of pension and retirement benefits to withhold income tax on payments that will be subject to tax.
To provide guidance in understanding the new withholding requirements, the State of Michigan has issued the 2012 Pension Withholding Guide. Withholding is required on taxable pension benefits. Pension administrators should follow the directions from recipients on any MI W-4P received. This form is included in the 2012 Pension Withholding Guide. If the payer does not receive a completed form MI W-4P from the retiree, withholding is mandatory if the retiree was born in 1946 or later.
Please contact the Multi-State Tax Group at Beene Garter if you have questions or would like additional information.