Can I withdraw more from my Roth IRA with 90% federal withholding to cover tax on early withdrawal?

I made a pretty big mistake earlier this year and withdrew $20,000 from my Roth IRA thinking I was just taking out my contributions, but turns out I was wrong. I had 0% withholding on that withdrawal and now I'm realizing I'm gonna owe taxes plus the 10% penalty on a good chunk of that money. I'm wondering if I can withdraw additional money from my Roth IRA but set the federal withholding super high like 90% to cover what I'll owe on the first withdrawal? Basically take out a smaller amount but have most of it go straight to the IRS to cover what I'll owe for the previous withdrawal? Is this even possible or am I just making things worse for myself? I'm kinda panicking about owing a big tax bill next April.

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18 comments

Victoria Charity

•8M

What you're describing is technically possible but probably not the best approach. The IRS does allow you to set a high withholding percentage on IRA distributions, but there are better ways to handle your situation. First, let's clarify something important: Roth IRA withdrawals have a specific order. Your contributions come out first (tax and penalty free), then any converted amounts, and finally earnings. When you withdraw earnings before age 59½ without meeting an exception, those earnings are subject to income tax plus the 10% early withdrawal penalty. Instead of taking another distribution with high withholding, consider making an estimated tax payment directly to the IRS using Form 1040-ES. This accomplishes the same goal without triggering additional taxable events or penalties.

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Victoria Charity

•8M

Withholding from an IRA distribution is generally treated as if it occurred evenly throughout the year, even if it happens in a single transaction in December. This is different from estimated tax payments, which are attributed to specific quarterly due dates. This timing difference can be an advantage if you're concerned about underpayment penalties. However, the fundamental issue remains that taking additional distributions creates more taxable events, potentially increasing your overall tax burden unnecessarily.

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Oscar Murphy

•8M

After I screwed up my Roth IRA withdrawals last year, I found this amazing tool that saved me so much stress - https://taxr.ai - it analyzes your tax documents and tells you exactly what parts of your Roth withdrawals are taxable vs non-taxable. It identified that about 30% of what I thought were taxable earnings were actually conversion amounts from years ago that had already completed the 5-year holding period. The system can review your complete distribution history and tell you precisely where you stand with contribution basis, conversions, and earnings. It even helped me find documentation for some contributions I made back in 2017 that I had completely forgotten about!

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Oscar Murphy

•8M

It works by having you upload whatever documents you have - Form 5498s, 1099-Rs, past tax returns, and even account statements. The AI processes all these documents together to reconstruct your contribution history. For older contributions where you might not have documentation, it can help identify indicators in your account history that suggest contribution patterns. It also looks at things like adjustments on prior tax returns, reported conversions, and can even suggest where to locate missing records based on patterns it identifies. Many people don't realize their old tax returns contain clues about past Roth activity.

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Nora Bennett

•8M

Just wanted to update everyone - I tried that taxr.ai thing mentioned above after fighting with my records for days. It was honestly a game changer! Turns out I actually had about $8,500 more in contributions than I thought because I had completely forgotten about rolling over a 401k to a Roth back in 2018 (paid taxes on it then). The system found this by spotting a discrepancy between my account value growth and my documented contributions, then prompted me to check for conversions. After digging through old emails I found confirmation of the rollover! This means a big chunk of my withdrawal this year isn't subject to taxes or penalties after all. Saved me possibly thousands in taxes I thought I owed!

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Lauren Zeb

•8M

I had a similar situation with an early Roth withdrawal and needed to talk to the IRS about my basis calculations, but kept getting the "call back later" message for WEEKS. I found this service called Claimyr (https://claimyr.com) that actually got me through to a human at the IRS in about 20 minutes instead of waiting for days. They have this system that navigates the IRS phone tree and waits on hold for you, then calls you when an actual agent is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent was able to pull up my contribution history across multiple accounts and confirm exactly what portion was taxable so I could make the right estimated tax payment.

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Lauren Zeb

•8M

It basically works by using a system that continuously redials the IRS when they give the "call volumes too high" message, and then stays on hold for you once it gets through. When a human agent finally answers, it connects the call to your phone - so you only have to talk to the actual IRS agent, not waste hours waiting. It's not a scam - it's just automating the frustrating process of getting through their phone system. Think of it as a "skip the line" service for the IRS. They don't interact with the IRS on your behalf at all - you're the one who talks to the agent directly. They just handle the frustrating part of getting connected. I was skeptical too but was desperate after trying for days to get through.

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Ryan Andre

•8M

I need to apologize for my skepticism earlier. After battling with the IRS phone system for another THREE HOURS yesterday and never getting through, I broke down and tried the Claimyr service. I honestly can't believe it actually worked. I had an IRS agent on the phone in about 30 minutes. The agent was able to confirm my contribution basis across multiple Roth accounts (I've moved mine between custodians a few times). This let me calculate exactly what portion of my early withdrawal would be hit with penalties. Turns out I had about $4,700 more in contribution basis than my current provider was showing! This service literally saved me hundreds in penalties I thought I would owe. Still kicking myself for not trying it sooner.

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Aurora Lacasse

•8M

For qualified education expenses, keep detailed records of all tuition, required fees, books, and required supplies paid during the tax year. The expenses must be for yourself, your spouse, or your dependents at an eligible educational institution. You'll use Form 5329 to report the early distribution and claim the exception. On line 2 of the form, you'll enter exception code "08" and the amount that qualifies for the education expense exception. This amount won't be subject to the 10% penalty, though it will still be taxable income if it's coming from earnings in your Roth IRA.

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