Timing of Federal Tax Payments

Forum|Forum|2 years ago
January 2, 2024
3 replies
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I'm newly retired in 2024 and plan to take two withdrawals during this year from my IRA for living expenses, in January and August. Are there negative tax consequences by withholding no federal taxes from the first withdrawal (the larger of the two withdrawals), then withholding 100% of my 2023 taxes owed from my August withdrawal? I'm not sure whether the timing of tax payments during the current tax year is critical as long as owed taxes for the current tax year are made by December 31. Thanks

Best answer by Anonymous_

This should not be an issue since withholding is considered to be paid evenly throughout the year, but note that you need to ensure that your withholding is sufficient.

I'll page @dmertz for more input.

Anonymous_Answer

Employee

This should not be an issue since withholding is considered to be paid evenly throughout the year, but note that you need to ensure that your withholding is sufficient.

I'll page @dmertz for more input.

Mike9241

you are correct. withholding is deem to be spread equally among the 4 quarters regardless of when it actually occurred.

Apparently your distributions are not RMDs, so the default withholding is 10% so make sure to talk to the iRA custodian about the withholding

dmertz

Employee

10% is the default withholding for a distribution from a traditional IRA whether or not the distribution is an RMD (and, because of aggregation, the IRA custodian has no way to know if any particular distribution is truly an RMD), so as Mike9241, be sure to specify no tax withholding on the first distribution if that's what you want. I've encountered bank reps that don't bother to ask and have ended up with unintended default 10% withholding.

bixler409Author

Thanks much for all for your responses and suggestions. I will specify 0% withholding on the January withdrawal and, for the August withdrawal, I'll specify an amount that is at least 100% of my 2023 federal taxes to preempt a penalty for not paying enough during 2024.