Electronic Payment of Retirement Plan Withholding through EFTPS

Beginning in 2011, the Financial Management Service (FMS), a Bureau of the Treasury Department, is eliminating the system that enabled the processing of Federal Tax Deposit Coupons (Form 8109). Accordingly, beginning January 1, 2011, all deposits must be made using the Electronic Federal Tax Payment System (EFTPS). This includes federal tax withholding on retirement plan distributions.The Electronic Federal Tax Payment System (EFTPS) is a free service from the U.S. Department of the Treasury. This system allows the taxpayer to schedule payments over the Internet or by phone. Plans with less than $2,500 of federal tax withholding on an annual basis can continue to make their payment to the IRS when filing the Form 945, but penalties may be assessed if the withholding amounts exceeds the $2,500 limit.

The time for depositing the withheld taxes has not changed. Monthly depositors have 15 days after the close of the calendar month in which the tax was withheld. If the deposit will be made with Form 945, the form and payment are due January 31st.

Plan sponsors may receive a letter from the IRS regarding the EFTPS process and provides them the PIN needed to activate the plan's enrollment in EFTPS. Plan sponsors can also apply for EFTPS by calling 800-555-4477 or enrolling online at www.eftps.gov.

Related Links:

• REG-153340-09
• Topic 757 - Form 941 and 944 – Deposit Requirements
• Publication 966, The Secure Way to Pay Your Federal Taxes for Businesses and Individuals
• Publication 15 (2011), (Circular E), Employer's Tax Guide