Withholding for Annuities and Pensions

Federal Form W-4P will not determine withholding allowances used to determine the amount of Minnesota withholding. Recipients completing a federal 2022 Form W-4P will need to complete 2022 Form W-4MNP to determine the appropriate amount of Minnesota withholding.

The types of distributions which the W-4MNP is used for include, but are not limited to:

• payments or distributions from an employee deferred compensation plan (such as a 401(k))
• an individual retirement plan (IRA)
• commercial annuities.

Recipients complete Form W-4MNP before they begin receiving payments or distributions from an employee deferred compensation plan (such as a 401(k)), an individual retirement plan (IRA), or a commercial annuity. They should also complete Form W-4MNP if their personal or financial situation changes. 

If recipients request more than one nonperiodic distribution from your institution, and you already have a Form W-4MNP on file, confirm with them whether they would like to use their previous election. If they choose to change their election, they must complete a new Form W-4MNP.

You must have a Minnesota Tax ID Number. If you do not have one, you can register for one online or by phone.

You must also have an active withholding tax account. Log in to our e-Services system to add one.

1. Have the recipient complete and send Form W-4MNP.
2. Calculate the withholding amount using the tables in the Minnesota Income Tax Withholding Instructions.
3. Send federal Form 1099-R to the Minnesota Department of Revenue by January 31 each year.

When filing your returns:

• Include the tax withheld amount in the total amount withheld field
• Indicate if your tax withheld is greater than your wages using the appropriate box
• Do not include the recipient of the pension payments in the number of employees field
• Do not include the payment amount in the wages field

Before 2022, Minnesota did not require withholding on annuity and pension payments. You may need to reach out to current recipients about the new requirement.

If, before 2022:

• You provided the option to withhold Minnesota income tax on distributions, you may continue following the recipient’s previous election. If they chose to have tax withheld, you may use the allowances they determined on a previous withholding allowance certificate.
• You did not provide the option to withhold Minnesota income tax on distributions, you must ask recipients to complete Form W-4MNP to either determine allowances or opt out of withholding on payments. If a recipient does not complete Form W-4MNP, you must withhold Minnesota tax using the Single filing status with zero allowances. Continue withholding at that rate until they provide you a completed Form W-4MNP.