Which act requires federal income tax withholding on retirement and annuity payments?

The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 is the legislation that established federal income tax withholding requirements on certain retirement and annuity payments. This act was primarily introduced to improve tax compliance and ensure that taxpayers meet their tax obligations on income received from these sources.

Under TEFRA, pension plans and annuities became subject to mandatory income tax withholding, similar to regular wages. This change aimed to help prevent tax underpayment issues for individuals receiving periodic payments from their retirement plans. The act outlines the procedures for withholding, including the option for recipients to elect not to have tax withheld if they meet certain criteria.

The other acts mentioned are significant in other areas of retirement plan law but do not specifically mandate federal income tax withholding on retirement and annuity payments in the same manner as TEFRA. The Economic Growth and Tax Relief Reconciliation Act and the Pension Protection Act focus on tax benefits and plan features, while the Employee Retirement Income Security Act deals primarily with the regulation of employee benefit plans but does not impose tax withholding requirements.