NRECA Employee Benefits Weekly

2018 Tax Withholding Rates for Qualified Retirement Plans

Posted on Posted in Retirement Benefits

The Tax Cuts and Jobs Act was signed into law on December 22, 2017. Provisions of the law change federal tax withholding rates and income tax brackets which affect annuity (and similar periodic payments) from qualified retirement plans starting in 2018. These changes affect the NRECA-sponsored 401(k) Pension Plan and the Retirement Security (RS) Plan.

Further, IRS guidance states that employers should begin applying the 2018 withholding tables as soon as possible but no later than February 15, 2018. Employers should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

For co-ops offering the NRECA-sponsored retirement plan(s)—Annuity payments from qualified retirement plans are subject to the new tax withholding rates. As we do annually, NRECA is taking the necessary steps to implement the federal and state 2018 tax withholding rates for 401(k) Pension Plan and Retirement Security Plan annuity payments.

  • For the RS Plan—Pay advices mailed to all recipients (including those who opt for direct deposit) by NRECA will reflect the new tax withholding rates. March 2018 payments will be the first to reflect 2018 federal and state withholding rates.
  • For the 401(k) Plan— As the annuity provider, MetLife is in the process of updating their payment system to reflect the new tax withholding rates. They have not yet announced the timing for the updates.

Unless the recipient chooses no withholding, the annuity payments are generally treated as regular wages for withholding purposes. Below are examples of the new withholding tables for individual/single and married taxpayers based on annual income.The IRS has designed the 2018 tax withholding rates to work with existing tax elections. The IRS is working to update its withholding tax calculator by end of February and to revise Form W-4.  All taxpayers are encouraged to check their withholding once the new tools are available.

The IRS is working to update its withholding tax calculator by end of February and to revise Form W-4.  All taxpayers are encouraged to check their withholding once the new tools are available.

Scroll to top