Most states in the USA have adopted P Indexing to guide P-based management of agricultural fields by identifying the relative risk of P loss at farm and watershed scales. To a large extent, this risk is based on hydrologic principles that frequently occurring storms can initiate surface runoff from fields. Once initiated, this hydrological pathway has a high potential to transport P to the stream. In regions where hydrologically active areas of watersheds vary in time and space, surface runoff generation by "saturation excess" has been linked to distance from stream, with larger events resulting in larger contributing distances. Thus, storm-return period and P loss from a 39.5-ha mixed-land-use watershed in Pennsylvania was evaluated to relate return-period thresholds and distances contributing P to streams. Of 248 storm flows between 1997 and 2006, 93% had a return period of 1 yr, contributing 47% of total P (TP) export, while the largest two storms (10-yr return period) accounted for 23% of TP export. Contributing distance thresholds for the watershed were determined (50–150 m) for a range of storm-return periods (1–10 yr) from hydrograph analysis. By modifying storm-return period thresholds in the P Index and thereby contributing distance, it is possible to account for greater risk of P loss during large storms. For instance, increasing return period threshold from 1 (current P indices) to 5 yr, which accounted for 67% of TP export, increased the P-management restricted area from 20 to 58% of the watershed. An increase in impacted area relative to a decreased risk of P loss creates a management-policy dilemma that cannot be ignored.