The form I was givin gives me 2 options. 1- check the box that says "I elect to have no Federal income tax withheld from my distibution. 2- Fill in the blank a % withheld(10% or greater).
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You are correct that you don't need to withhold anything on IRA distributions
(this is different than withdrawing from a company plan). You might want to ask the trustee if you can override the withholding instructions at any time and how much flexibility you have.
Generally you have 2 choices
1) Pay quarterly estimated taxes , either equal amounts each quarter (the simplest) or proportional to income each quarter, or variations thereof;
With estimated taxes even if you paid the correct amount, you could have a underpayment penalty if the quarterly payment weren't equal or properly
phased to the income.
2) Pay withholding.....one of the advantages of withholding is that it is considered as being paid evenly throughout the yr. This means that you could not withhold until the last quarter (when you might have a better idea of your tax liability) and then withhold in one lump or several late in the yr
and not be penalized for being late. If you got a job, the withholding from wages could also be lumped late in the yr as it could be for the IRA withholding.
You should check if the IRA trustee to see if e.g. they would allow 100%
late in the yr after being 0% the rest of the year.
You also should be using a tax calculator (google "Taxcaster") or software to be estimating your tax as you go through the year. Become familiar with the 2 safe harbor concepts so you know what your target is.
Good luck on the job hunt.