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February 16, 2009

Periodic payment (periodic distribution)

Your Guide



Periodic payments are made in installments at regular intervals over a period of more than 1
year. They may be paid annually, quarterly, monthly, etc. ( Form W4-P)

The Code defines a periodic payment as “designated distribution which is an annuity or similar periodic payment.

Periodic payments include the following:

  • Cash withdrawals.
  • Distributions of current earnings (dividends) on investments.
  • Loans treated as distributions
  • The value of annuity contracts transferred without full and adequate consideration

Referring Cite

IRC § 3405(e)(2), IRS Form W4-P

Additional Helpful Information

The withholding rate for a periodic payment is determined in the same manner that withholding from wages is determinedIRC § 3405(a)(1)

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Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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