20 Dec Do I have to withhold taxes from my IRA distribution?

Q. Outside of my required distribution from my IRA, my only income is Social Security. The company that holds the IRA says I have to have tax withheld. I say I shouldn’t because I owe very little in taxes each year or end up getting a refund. Why can’t I refuse to have the tax withheld?
— Taxpayer

A. You can.

IRA custodians will automatically withhold taxes from IRA distributions as a matter of policy, but you do have a choice in the matter.

Indeed, IRA distributions are subject to 10% withholding.

But you can elect out of the withholding or choose to have a different amount withheld, said Gail Rosen, a Martinsville-based certified public accountant.

“You must make a withholding election, or your IRA custodian must withhold 10%,” she said.

She recommends you ask the custodian that holds your IRA to provide you with the form “IRA Withholding Notice and Election” or IRS form W-4P.

“This is the procedure you use to override the 10% mandatory withholding requirement,” Rosen said.

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This story was originally published on Dec. 20, 2021.

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