RMDs—Have taxes witheld or not
If an RMD is $10,000 and you ask your retirement plan sponsor to withhold 20% in taxes, does the sponsor send $2,000 to the IRA and send you $8,000? Is it more beneficial to not have taxes withheld and pay taxes from a non-retirement account, or it doesn’t matter?
Permalink Submitted by Alan - IRA critic on Sat, 2021-02-13 19:10
It does not matter, because the taxes are paid from your after tax accounts either way, since the withholding is taken as part of a distribution. Withholding from an IRA distribution just means you will have 2000 less to come up with from your other sources. Withholding is also more tax efficient than paying quarterly estimates because it is treated as having been paid throughout the year rather than when actually withheld, you do not have to handle the money, and may be enough to avoid 4 quarterly estimates alltogether.