Electronic Payment of Withholding Tax through Employer's Bank Account (Posted August 23, 1999) Technical Tip 11: The following question and answer were from the IRS Q&A Session at the 1998 ASPPA Annual Conference: Due to new electronic tax payment rules (for tax withholding Form 945), many plans will have to pay 20% withholding tax electronically. Since many plans do not maintain bank accounts, is it okay to transfer the tax withheld (on distributions) to the sponsor's checking account, so payments may be made electronically? Any comments on prohibited transaction issues? IRS Response: We believe this is acceptable and does not give rise to a prohibited transaction. View all Tips © 1999-2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.