Looking at my Google analytics, I get numerous queries daily regarding tax withholding on tradional IRAs. Some of the most common queries are:
“IRA withdrawal taxes”, “do you pay taxes on IRA withdrawals”, “how much tax to withhold from IRA withdrawal”, and “IRA taxes”.
In short, unless you elect to not have taxes withheld (or additional taxes) from your distributions (withdrawals), the plan administrator for a traditional IRA will withhold 10% Federal. Depending on the State you live in some States only withhold if instructed, some are mandatory and finally, if no State tax, there is no withholding. I live in Georgia, we have a State tax, by withholding only occurs if you instruct the plan administrator to do so.
The information above relates to normal distributions, if you withdrawal from a traditional IRA before age 59.5, you will be subject to a 10% withholding penalty.
Your Traditional IRA withdrawals will be taxed as ordinary income, so a large withdrawal can put you in a higher tax bracket and affect the taxable portion of your Social Security income.
Read more about the basics of traditional IRAs at http://www.sidehustleretirement.com/what-is-a-traditional-ira/.
Read more about IRA withdrawal requirements and tax strategies at http://www.sidehustleretirement.com/tax-strategies-for-ira-withdrawals/.
Read more about rollovers for your IRA at http://www.sidehustleretirement.com/avoiding-ira-rollover-errors/
If your starting in your retirement planning process, check out http://www.sidehustleretirement.com/best-retirement-savings-strategy/
.
