W-4P Form
I have a question for you smart retirees – I have learned so much from you as I prepare to retire.
I am retiring with 20 years (MRA +10). I know I am leaving money on the table, but I am doing this for my sanity over the administration and to spend more time with my grandkids.
My question is over the very confusing W-4P Withholding Certificate for Periodic Pension or Annuity Payments form. That is my last form to complete. I have read the instructions and consulted with my friends that recently retired. No one really knows what to do with it. I wish it were like a normal W4 where I just choose my withholdings.
When I do the worksheet based on last years taxes and my spouses salary, it says my 4(b) deduction will be over $32k. If that is how much they hold back in taxes, it will be $11k more than my reduced annuity! And, I would not have enough to cover the health insurance premium deduction.
The instructions state if I don’t enter anything, the standard deduction will be used.
I am afraid to enter No Withholding, but that is what I want to do and deal with the taxes at the end of the year.
I realize that deductions are not withholdings.
It is the form that does not make sense. Will FERS just calculate the withholdings based on the standard deduction?
I think my real question is if I put $32k in 4(b) will I get any pension payment? I need it to cover the health insurance premium deduction. And, I would like to get something during the year and not wait for a tax refund.
Thank you for any guidance!