Prior to the updates, the old Form W-4P was used to withhold federal tax from both periodic payments (e.g., monthly pension payments) and nonperiodic payments (e.g., DROP lump sum payments). The IRS redesigned the Form W-4P and created a new Form W-4R to simplify withholding, make tax withholding more accurate, and to be consistent with the recent federal tax law changes.

The IRS removed the option to enter allowances to be consistent with current tax law.  Instead, Form W-4P considers information that affects your taxable income.  Note however that the form to elect California state tax withholding has not changed and still allows you to enter a number of allowances.

If you do not wish to change your federal and/or California state tax withholding, LAFPP will continue to withhold taxes according to the elections we have on file for you until you submit new elections.

Beginning January 1, 2023, if there are no tax withholding instructions on file for you, LAFPP is required to withhold federal tax from your taxable monthly pension payment based on a filing status of Single with no adjustments.In addition, if you are a resident of California, LAFPP is required to withhold California state tax from your taxable monthly pension payment based on a filing status of Married and three allowances.

If you are receiving a taxable pension payment and do not want federal tax withheld, you can write “No Withholding” in the space below Step 4 and complete Steps 1(a), 1(b), and 5 only on the IRS Form W-4P.  For MyLAFPP submissions, you can check the “No Withholding” box below Step 4 and complete Step 5 only in the “Federal Tax Instructions” section.If you are a California resident receiving a taxable pension payment and do not want California state tax withheld, you can select Option 1 on the LAFPP California Income Tax Withholding Form. Be sure to complete the personal information section and sign and date the form. For MyLAFPP submissions, you can select the “No Withholding” option from the “Tax Calculation Method” drop down menu in the “State Tax Instructions” section.

You may submit your tax withholding elections electronically by logging into MyLAFPP or you can submit the appropriate tax withholding paper form(s) to LAFPP:

• Federal Tax Withholding: Please submit a completed and signed Form W-4P. The form is available for download from the IRS website at www.irs.gov/pub/irs-pdf/fw4p.pdf.
• California State Tax Withholding: Please submit a completed and signed LAFPP California State Income Tax Withholding Form.  The form is available for download from the LAFPP website here.

Submissions received after the 15th of the month will become effective the following month.

Please see the “General Instructions” section of Form W-4P for information on how to complete the form.

LAFPP cannot offer tax or legal advice. The Form W-4P contains a “General Instructions” section to assist you with completing the form. For further assistance, we encourage you to contact the taxing agency or your tax advisor.