Effective January 1, 2012, Michigan requires Schwab to withhold state income tax on certain qualified pension and retirement distributions unless the participant is eligible to and elects out of withholding. As a result, beginning on March 19, 2012, Schwab will begin to withhold the mandatory 4.35% from all retirement distributions if the proper forms are not received from eligible clients.
On February 15, 2012, all impacted clients with an active tax withholding election and/or an active standing instruction on their account where the state taxes are zero or below 4.35% will be mailed notification from Schwab by letter of the Michigan state tax requirement. Instructions will be included on how to update tax withholding information.
Additionally any payment(s) received as of January 1, 2012 may have the 4.35% withheld.
Please contact us if you receive these documents from Charles Schwab and you have questions or would like assistance in filling out the forms.