You fill out Form W-4P so your payer can withhold the correct amount of federal income tax from your periodic pension, annuity (including commercial annuities), profit-sharing and stock bonus plan, or individual retirement arrangement (IRA) payments. The form goes to whoever sends you your pension payments. You enter annual amounts on the form and the payer will make the adjustments to your periodic (usually monthly) payments.
In Step 4, you can adjust the amount of taxes the payer will withhold. These are optional adjustments. If you claim deductions on 4b and therefore have lower taxable income, you can enter the amount of those deductions (annual amount) so less tax is withheld from your payments. The net payment you receive each month will be larger than if you don't enter anything on 4b.
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