• D.C. Changes Its Mind - Now Only Lump Sum Distributions from Retirement Plans Are Subject To Withholding
  • March 26, 2012 | Authors: Dan S. Brandenburg; Joanne G. Jacobson
  • Law Firm: Saul Ewing LLP - Washington Office
  • On December 22, 2011 a last-minute emergency bill (B19-626, which can be viewed at http://dcclims1.dccouncil.us/images/00001/20111222095652.pdf) was signed into law by District of Columbia Mayor Vincent Gray that required employers for the first time, effective January 1, 2012, to withhold D.C. income taxes from retirement plan and IRA distributions to D.C. residents. Less than three months later, effective February 29, 2012, the requirement to withhold D.C. income taxes from periodic and non lump-sum distributions (i.e., installment payments made over less than 10 years) has been repealed. The requirement to withhold is now limited to lump-sum distributions. No withholding is required if the lump sum distribution is directly rolled over to another eligible retirement plan.