Converting dollar amount into withholding status

[Rcf026]

My wife and I are both about to retire. During retirement our income will be derived from two pensions, 401(k) distributions, and ordinary dividends from taxable investments. I am trying to determine the appropriate federal tax withholding status for each income stream. I have calculated a dollar amount that should be withheld from each, and I have verified these amounts are correct (or close enough) by creating a mock tax return using TurboTax 2019.

The problem is that the pension plans and the 401(k) will not allow me to provide them a specific dollar amount to withhold. They want me to provide a withholding status (M0, M1, etc.), and an additional dollar amount to be withheld if I desire. I don’t know how to accurately convert the dollar amount I have in mind for each income stream into a withholding status. Can anyone provide a method for doing this please? Thank you!

[Rainman12]

It would be Highly unusual for any pension plan or retirement fund to allow you to specify exact dollar amounts for withholding. Since you've apparently done the hard work - estimating total amount you want withheld, based on total income - you have two realistic options:

1) Follow rules for Normal withholding based on Percentage from each of your sources as their rules allow to approximate total amount desired to be withheld when added together, or

2) Have nothing withheld, and make estimated quarterly payments to IRS based on your calculations.

[Rcf026]

Thank you for the response. I never thought about waving withholding all together and paying quarterly estimated taxes. If the pension plans will allow me to waive withholding it seems simple enough to divide the tax obligation by four and submit quarterly payments. If one of the vehicles demands withholding it is still simple enough to calculate the balance of the obligation and submit the payments. Very good!

I assume as long as I meet the quarterly deadlines there is no penalty for completely waving withholdings during the quarter?