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February 16, 2009

Nonperiodic payment (nonperiodic distribution)

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Definition

Distributions from a retirement account that are payable on demand , i.e. they can typically be requested in any amount at anytime.

The tax  code defines nonperiodic distributions as “any designated distribution which is not a periodic payment”.

Referring Cite

IRC § 3405(e)(3), IRS Form W4-P

Additional Helpful Information

  • The withholding rate for a nonperiodic payment is 10%, providing the amount is not rollover eligible. IRC §3405(b)(1). If the amount is rollover-eligible, and is not processed as a direct rollover, the withholding is 20%

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