Paying Taxes with IRA funds
Is money withdrawn from a traditional IRA that is used to pay taxes considered a taxable withdrawal?
Also, can that withdrawal count toward satisfying RMD requirements?
Is money withdrawn from a traditional IRA that is used to pay taxes considered a taxable withdrawal?
Also, can that withdrawal count toward satisfying RMD requirements?
Permalink Submitted by Alan - IRA critic on Tue, 2022-08-30 18:49
Yes, all IRA distributions including RMDs are taxable distributions except to the extent that the IRA owner has basis from non deductible contributions. All distributions also count toward the RMD, including withholding. Custodians will normally allow up to 99% of an IRA distribution for federal withholding, so if the RMD is large enough to cover the expected tax liability, withholding from the RMD distribution will eliminate the need to pay quarterly estimated taxes.