Simple IRA Withdrawals
What happens if the company holding funds in a SIMPLE IRA does not withhold the 25% penalty for withdrawing money before the 2-year period happens?
What happens if the company holding funds in a SIMPLE IRA does not withhold the 25% penalty for withdrawing money before the 2-year period happens?
Permalink Submitted by Alan - IRA critic on Wed, 2023-06-14 19:40
Permalink Submitted by David Mertz on Wed, 2023-06-14 21:16
As with any traditional IRA distribution, the IRA custodian is required to withhold 10% by default unless the recipient requests that 0% or more than 10% be withheld for federal taxes. It’s not the IRA custodian’s responsibility to withhold more than 10% when there is no withholding instruction from the recipient. It’s the responsibility of the recipient to make sure that taxes necessary to avoid an underpayment penalty are paid timely.