Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Withholding for IRA withdrawals
Old 03-04-2024, 08:45 AM   #1
Recycles dryer sheets
 
Join Date: Dec 2021
Posts: 96
Withholding for IRA withdrawals

This is the first year that DH and I have had 1) full SS and 2) a large amount of IRA withdrawals. I just did the taxes with Turbo-tax, and we have a $6000 tax bill. This is because our monthly W/Ds from Fidelity only withhold 10%. This was my bone-headed mistake, but as I said, this is the first year where we really dipped into IRA money.


Going forward, and keeping it as simple as possible (I have been reading other threads about how others do this), would I be safe in setting the IRA withdrawal withholding rate (via Fidelity) to our tax bracket rate, which is 22% [low end, about $98000] ?
This would assume that our total W/Ds would be about the same, and that taxes did not increase too much.

Apologies in advance, as I am not as knowledgeable as many are here.
pugmom is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-04-2024, 08:51 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 10,347
Simplest thing is to forget the withholding, the calculations, and the brackets and just take one tIRA distribution at the end of the year to bring your total tax payments to the safe harbor* amount. Lots of threads here endlessly discussing this tactic. Doing it this way means you don't have to guess whether a home-made withholding strategy is safe or not.

*https://www.hrblock.com/tax-center/i...t-tax-penalty/
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Old 03-04-2024, 09:51 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,329
Quote:
Originally Posted by pugmom View Post
This is the first year that DH and I have had 1) full SS and 2) a large amount of IRA withdrawals. I just did the taxes with Turbo-tax, and we have a $6000 tax bill. This is because our monthly W/Ds from Fidelity only withhold 10%. This was my bone-headed mistake, but as I said, this is the first year where we really dipped into IRA money.


Going forward, and keeping it as simple as possible (I have been reading other threads about how others do this), would I be safe in setting the IRA withdrawal withholding rate (via Fidelity) to our tax bracket rate, which is 22% [low end, about $98000] ?
This would assume that our total W/Ds would be about the same, and that taxes did not increase too much.

Apologies in advance, as I am not as knowledgeable as many are here.
You need to look at your overall rate and not the tax bracket (22% in your case).

It sounds like you have a reasonably set amount of tIRA withdrawals in mind for 2024. If so, I would use the What-If Worksheet in Turbo tax to estimate your full year 2024 taxes. Let's say it is $10k. The reduce the $10k by YTD withholdings. Divide that result by your remaining tIRA withdrawals for the year and that will give you a withholding rate for the remaining withdrawals.

I would round down as it is IMO better to owe a little than get a small refund.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 04-10-2024, 08:58 AM   #4
Dryer sheet aficionado
Retiired's Avatar
 
Join Date: Apr 2016
Posts: 25
Yes, "How to Fail........" is an awesome book for young (and old) people. Don't let people's perceptions of the author prevent you from sharing the strong life lessons found in the book.
Retiired is offline   Reply With Quote
Reply

Tags
tax estimator, tax payment


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
All Roth Conversion or some IRA withdrawal for tax withholding twobits FIRE and Money 15 01-09-2024 03:42 PM
DQOTD: Withholding on Vanguard IRA Distributions? Midpack FIRE and Money 7 11-03-2019 07:12 PM
Tax question - late year IRA withdrawal and under withholding penalty Gumby FIRE and Money 27 08-30-2019 12:02 PM
Early IRA withdrawals and Self Directed IRA's mdebluz FIRE and Money 6 04-03-2010 03:20 AM
IRA Tax withholding question Katsmeow FIRE and Money 9 01-15-2010 11:29 PM

» Quick Links

 
All times are GMT -6. The time now is 05:14 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.