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
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)