Federal law requires that CalSTRS withhold 20 percent federal income tax for all lump-sum payments and period-certain annuities of three to nine years that are paid directly to you. CalSTRS will automatically withhold federal tax from your payment. Under state law, you can choose not to have any state tax withholding. If you choose to have state tax withheld, CalSTRS will withhold at 10 percent of your federal income tax withholding for all lump-sum payments and period-certain annuities of three to nine years paid directly to you. For example, if you have 20 percent federal tax withholding, your state withholding will be 2 percent.
Do you want to withhold California state income tax?
