Does law require ny investor to withold money from my IRA if i withdraw large sum at 59 1/2?
Question by SpongebobRoundpants : Does law require ny investor to withold money from my IRA if i withdraw large sum at 59 1/2?
I understand I will have to pay taxes, but do I do the reporting or is my investor required to withhold a certain amount of money and give to IRS? In other words, if I asked for 100,000 cash, would i get 100,000 cash or would some of the 100,000 be paid in Advance to IRS?
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The withdraw forms I have seen give you your choice. You are subject to penalties if you need to make quarterly payments and don’t. I say opt to have tax withheld.
You should be offered a withholding choice when you make a withdrawal from a traditional IRA after age 59 1/2. The standard Federal withholding is 10%, but you can elect not to have anything withheld. It’s usually better to allow the 10% withholding, to avoid an under-withholding penalty when you file your tax return next April.
The default withholding for tax is 10%. If you pull out $100,000 some of that is going to be taxed at 25% and you will *still* owe taxes in April. And since that will be far more than $1000, you are *still* setting yourself up for an estimated tax penalty.