What are my tax withholding options for a distribution or Roth conversion?

Because every taxpayer's situation is different, STRATA Trust Company recommends consulting a qualified tax professional regarding the appropriate amount of tax withholding for your distribution or Roth conversion. As a directed custodian, STRATA does not provide tax, legal, or investment advice.

When requesting a distribution or Roth conversion, you may elect to have federal and, where applicable, state income taxes withheld from the transaction. Alternatively, you may choose not to have taxes withheld and address any tax liability when filing your tax return.

If you do not make a federal withholding election, STRATA is required to withhold 10% of the distribution or Roth conversion amount in accordance with federal tax regulations. Once processed, withholding elections cannot be reversed.

Your withholding election will remain in effect until you submit a new election. Please note that insufficient tax withholding or estimated tax payments may result in IRS penalties.

Resources:

For additional information, refer to IRS Publication 505, Tax Withholding and Estimated Tax, available at IRS.gov. If you are uncertain how much tax to withhold, consult your tax advisor and consider using STRATA's Marginal Rate Tables and State Tax Withholding Information as a reference when making your withholding election.

Please note that if withholding is requested, your IRA must have sufficient available cash to cover the withholding amount and any applicable fees.