OSGP distributions are subject to both federal and Oregon income taxes. If you are a non-resident of Oregon, you must complete a Tax Withholding Certificate and elect out of Oregon withholding if you do not want Oregon income taxes withheld. If you desire to have taxes withheld for your state of residence, you must provide appropriate forms to the Plan with instructions to withhold taxes for your state of residence.
A 20 percent withholding is required for eligible rollover
distributions (lump sums, partial lump sums, and installments paid out in less than 10 years). You may not choose to have no federal income tax withheld on these distributions, but you may elect to have more than 20 percent withheld. If you make no determination, OSGP will withhold federal and Oregon income taxes from your distributions at the default rates determined by the Internal Revenue Service (IRS)—married with three exemptions—and the Oregon Department of Revenue (single with zero exemptions). You may specify different withholding elections by completing the Tax Withholding Certificate form (available by clicking the Form button) and then submitting it to OSGP.
By January 31 of each year, OSGP will mail one or more IRS Form 1099R forms reporting any distributions paid the previous year.
The IRS recently released new tax withholding tables that incorporate the Making Work Pay tax credit. This is one of the provisions included in the American Recovery and Reinvestment Act of 2009 stimulus bill that Congress recently passed. These new tables may result in less federal tax being withheld from your OSGP installment payment, so you may see an increase in the amount of your installment beginning with the April 1, 2009 payment.
Although the IRS has directed OSGP to use the new withholding tables, retirement income is not covered by the new tax credit. The new tax tables decrease the amount of taxes withheld, so this may change your tax situation at the end of the year. Please consult your tax advisor if you have questions about these changes.