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REFERENCE TITLE: income tax withholding; retirement distributions |
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State of Arizona Senate Fifty-sixth Legislature Second Regular Session 2024
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SB 1358 |
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Introduced by Senator Mesnard
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An Act
amending section 43-404, Arizona Revised Statutes; relating to income tax withholding.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 43-404, Arizona Revised Statutes, is amended to read:
43-404. Extension of withholding to pensions, annuities, retirement accounts; definitions
A. For the purposes of this title, any payment of an amount as retired or retainer pay for service in the military or naval forces of the United States, or payments received under the United States civil service retirement system from the United States government service retirement and disability fund, if at the time the payment is made a request by the individual that such pay be subject to withholding under this section is in effect, shall be treated as if it were a payment of wages by an employer to an employee for a payroll period. In addition, a payment of any other from a pension or annuity or a distribution from a retirement account to an individual, if at the time the payment or distribution is made a request by the individual that such pension, annuity, retirement account be subject to withholding under this section is in effect, shall be treated as if it were a payment of wages by an employer to an employee for a payroll period.
B. A request that retired or retainer pay or an payment from a pension or annuity or distribution from a retirement account be subject to withholding under this section shall be made by the payee in writing to the person that is making the pension or annuity payments or retirement account distributions and shall be accompanied by a form, prescribed by the department, executed in accordance with section 43-401, subsection E. Such a request may be terminated by furnishing to the person making the payment or distribution a written statement of termination.
C. Distributions from a retirement account are eligible for withholding, but only to the extent that amount is includable in the Arizona gross income of the individual who receives the distribution.
D. A request to initiate, adjust or terminate withholding under this section may be executed in writing by paper or electronic means on either a paper form prescribed by the department or the form's electronic equivalent.
C. E. For the purposes of this section: ,
1. "Annuity" means any amount paid to an individual as a pension or annuity either of the following:
(a) An employee annuity authorized under the internal revenue code paid to an individual, but only to the extent that the amount is includible includable in the Arizona gross income of such individual.
(b) Specified income payable at stated intervals to an individual for a fixed or contingent period, often for that individual's life, but only to the extent that the amount is includable in the Arizona gross income of such individual.
2. "Pension" means either of the following:
(a) A defined benefit plan authorized under the internal revenue code paid to an individual, but only to the extent that amount is includable in the Arizona gross income for such individual.
(b) Periodic, fixed amount retirement payments made by the United States military, the United States civil service or a state or local government or a private employer to former employees and surviving spouses of former employees for prior services performed, but only to the extent that amount is includable in the Arizona gross income of such individuals.
3. "Retirement account" includes:
(a) A qualified retirement plan under sections 401, 403 and 457 of the internal revenue code.
(b) An individual retirement account under section 408 of the internal revenue code, including a simplified employee pension fund as defined in section 408(k) of the internal revenue code and a simple retirement account as defined in section 408(p) of the internal revenue code.