Brian Wynne, CPA

DC passed emergency legislation last Friday, February 24, 2012, mostly repealing the new-for-2011 withholding requirements on retirement distributions to DC residents.  Previously, DC required top-rate (8.95%) withholding on all retirement distributions to DC residents.  Effective immediately, the withholidng requirement is repealedfor periodic and non-lump-sum retirement plan distributions.  The withholding requirement now only applies to lump-sum distributions, but excludes:

 

(1) any portion of a lump-sum payment that was previously subject to tax;

(2) an eligible rollover distribution that is done as a trustee-to-trustee transfer; and

(3) a rollover from an IRA to a traditional or Roth IRA that is done as a trustee-to-trustee transfer.