What percentage should I withhold for taxes when taking money from my IRA?

Thanks for this explanation! I'm about 3 years from retirement and starting to plan. Question - does it make more sense to withhold from each distribution or just make quarterly estimated tax payments instead? And do you need to withhold for state taxes separately or can you just handle that at tax time?

For your first question, either approach can work - withholding from distributions or making quarterly payments. Withholding is often simpler because it's automatic and the IRS treats withholding as occurring evenly throughout the year even if you take a large distribution late in the year. Quarterly payments require more active management and specific timing. Regarding state taxes, it depends on your state and your overall tax situation. Many people do withhold for state taxes from their distributions to avoid a surprise bill. Some states don't tax retirement income at all, while others follow federal rules or have their own exemptions. I'd recommend checking your specific state's rules on taxing retirement distributions.

Does it actually give you specific withholding advice? I've used some tax calculators before but they just gave general estimates, not actionable recommendations. How accurate was it compared to what you actually ended up owing?

I'm a bit skeptical of these online tools. How does it handle things like RMDs when you turn 73? And does it factor in state taxes too? My state taxes retirement income differently than the feds.

The tool does provide specific withholding recommendations - it gave me an exact percentage to withhold based on my projected annual income and deductions. For me, it was incredibly accurate - I ended up with a small refund of around $240 rather than owing thousands like the previous year. It definitely handles RMDs and has a specific calculator for those requirements as you age. It factors in both federal and state taxes, with specific modules for different state tax rules. It knew exactly how my state (Minnesota) treats retirement income, which has some exemptions that the federal doesn't recognize.

How does this actually work? Do you have to give them personal information? Seems sketchy to have a third party connecting you to the IRS.

Yeah right. Nobody gets through to the IRS these days. I tried calling for WEEKS last tax season and never got anyone. If this actually worked, everyone would be using it. Sounds like a scam to me.

You don't give them any sensitive personal information. The service just connects the call - they don't stay on the line during your conversation with the IRS. You provide your phone number, and they call you when they've gotten through the IRS queue. It's basically just a call connection service that waits on hold so you don't have to. I completely understand the skepticism. I felt the same way after wasting so many hours on hold. But it genuinely works - they use a system that keeps your place in line without you having to stay on the phone. Once they reach an agent, they connect you directly. The IRS doesn't even know you used a service to get through, they just think you waited on hold like everyone else.

Can you actually change your withholding mid-year like that? I thought once you set it up, you had to stick with that percentage for the whole year. How do you adjust it with Fidelity specifically?

Yes, you can absolutely change your withholding percentage throughout the year! There's no rule that says you have to keep the same withholding rate. With Fidelity specifically, you just log into your account, go to the withdrawal section, and there's an option to update your tax withholding preferences. It takes effect on your next distribution. I've found this flexibility really helpful because my income varies throughout the year. Some years I have more capital gains in the second half, so I increase my IRA withholding to compensate. It's much better than getting surprised at tax time or having to make separate estimated payments.

The IRS Withholding Estimator isn't great for retirees. I've had better luck with some of the retirement-specific calculators from Schwab or Fidelity. They have options specifically for pension and IRA income that the IRS calculator doesn't handle well.

This is really helpful advice, Ryan! I'm actually in a similar situation to Brady - just starting to think about retirement withdrawals. Your point about calculating total retirement income first makes a lot of sense. Quick question: when you mention starting conservative and adjusting later, how often can you actually change the withholding percentage? Can you do it monthly, quarterly, or is there a limit on how frequently you can adjust it? I'm worried about either over-withholding early in the year or under-withholding if my income changes mid-year. Also, did you find any good resources for estimating what your Social Security and other income will actually be? I'm having trouble getting accurate projections for planning purposes.

Great questions, Zoe! You can actually change your withholding percentage as often as you want with most custodians - there's no IRS limit on frequency. I've adjusted mine 3-4 times in a single year when my income situation changed. With Fidelity (like Brady mentioned), you just log in and update it online, and it takes effect on the next distribution. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Their benefit estimator is pretty accurate and shows projections based on your actual earnings history. For other retirement income, I found it helpful to gather all my statements (401k, pension, etc.) and use their online calculators or call their customer service for projections. One thing I learned the hard way - don't forget about the "tax torpedo" effect where Social Security becomes taxable as your other income increases. Up to 85% of your SS benefits can be taxable depending on your total income, which can push you into a higher effective tax rate than you expect. This is why starting conservative with withholding really pays off!

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Vanguard, etc. let you update it online and it takes effect with your next distribution. I've changed mine 3-4 times in a year when my income situation shifted. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Your Social Security Statement there shows projected monthly benefits based on different retirement ages. It's pretty accurate if your earnings history is complete. For other income sources, I found it helpful to gather all my statements (401k, IRA balances, pension estimates) and use a retirement calculator that can factor in multiple income streams. One thing I learned the hard way - don't forget that Social Security can be partially taxable depending on your total income. That caught me off guard my first year! The "provisional income" calculation can push you into owing taxes on up to 85% of your SS benefits if your total retirement income is high enough.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no limit. Most brokerages like Fidelity, Schwab, and Vanguard let you update it online anytime, and it takes effect on your next distribution. I've changed mine 3-4 times in a year when my income situation shifted. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Your Social Security Statement there shows your projected benefits based on your actual earnings record. It's way more accurate than online calculators that just estimate. For other retirement income planning, I've found the retirement calculators at Fidelity and Vanguard pretty solid if you bank with them. They can pull in your actual account balances and give realistic projections. One thing I learned the hard way - factor in Medicare premiums if you're close to 65. Those come right out of your Social Security, so your net Social Security income will be less than the gross amount shown on your statement. IRMAA (high-income Medicare surcharges) can also kick in if your total retirement income is higher than expected.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokers like Fidelity, Schwab, and Vanguard let you update it online anytime, and it usually takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Your Social Security Statement there shows estimated benefits based on your actual earnings history. It's way more accurate than the generic calculators. You can see projections for retiring at 62, full retirement age, and 70. For other income sources, I found it helpful to create a simple spreadsheet listing all expected income month by month - Social Security, IRA withdrawals, any part-time work, rental income, etc. Then you can see how your total income flows throughout the year and adjust IRA withholding accordingly. One thing I learned the hard way: if you're not taking Social Security yet but plan to start mid-year, that can really throw off your withholding calculations since SS is partially taxable and changes your overall tax picture significantly.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokers like Fidelity, Schwab, etc. let you update it online anytime, and it takes effect on your next distribution. I've changed mine 3-4 times in a year when my income situation shifted. For Social Security projections, definitely create an account at ssa.gov and look at your Social Security Statement. It gives you estimated benefits based on different retirement ages. For other income, I found it helpful to make a simple spreadsheet with all potential sources - pension statements usually have payout calculators, and you can estimate part-time work or rental income. One thing that caught me off guard was how Social Security is taxed - up to 85% of it can be taxable depending on your other income. The "combined income" formula (AGI + nontaxable interest + half of Social Security) determines how much gets taxed. This definitely affected my withholding calculations since I hadn't factored that in initially. Ryan's advice about starting conservative is spot-on. I actually started at 25% my first year because I was unsure, then dialed it back to 20% once I had a better handle on my actual tax liability.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Schwab, and Vanguard let you update it online anytime, and it typically takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security estimates, definitely create an account at ssa.gov if you haven't already. Their benefit estimator is pretty accurate and shows projections based on different retirement ages. It uses your actual earnings history, so it's much more reliable than generic calculators. For other retirement income projections, I'd recommend logging into your 401k/403b accounts and using their retirement calculators. Most have tools that estimate your account value at different retirement dates and what that translates to in monthly income. One thing that really helped me was creating a simple spreadsheet with all my projected income sources by month. Social Security might start mid-year, pension might be annual, IRA withdrawals might be quarterly - mapping it all out monthly helped me see when I needed higher or lower withholding rates throughout the year.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Schwab, and Vanguard let you update it online anytime, and it typically takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Your annual Social Security Statement shows projected benefits at different retirement ages and is usually pretty accurate. For other retirement income, check if your former employer has an online portal for pension estimates, or contact their HR/benefits department directly. One strategy I've found helpful: if you're taking monthly distributions, you could start with a higher withholding rate (like 15-18%) for the first quarter, then reassess based on how your total income is tracking. It's much easier to lower withholding mid-year and get a refund than to realize in December you haven't withheld enough and scramble to make estimated payments.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Schwab, etc. let you update it online anytime, and it takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account at ssa.gov - their benefit estimator is pretty accurate and shows projected benefits at different retirement ages. For other retirement income, your 401k/IRA providers usually have calculators, or you can use tools like the ones from Vanguard or T. Rowe Price. One strategy I've used: I start each year withholding at my expected bracket rate, then do a mid-year check around July. If I'm on track, I leave it alone. If my income is higher or lower than expected, I adjust the withholding for the remaining distributions. It's much easier than trying to make estimated payments to catch up. Ryan's advice about starting conservative is spot-on - better to get a refund than deal with underpayment penalties and interest!

Great questions, Zoe! You can actually change your withholding percentage pretty much whenever you want - there's no limit on frequency. Most brokerages like Fidelity, Schwab, etc. let you update it online and it takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account on ssa.gov if you haven't already. Their benefit estimator is pretty accurate and shows you projections based on different retirement ages. It's way more reliable than the generic calculators you find elsewhere. For overall retirement income planning, I'd also suggest looking at your most recent statements from any pensions or 401(k)s to get realistic numbers. Many people underestimate how much their total retirement income will actually be, which is why that 10% default withholding catches so many people off guard. Ryan's advice about starting conservative is spot-on. I started at 18% my first year, ended up with a small refund, then dialed it back to 15% the following year. Much better than owing penalties!

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Vanguard, etc. let you update it online anytime and it takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account on ssa.gov if you haven't already. Their benefit estimator gives you pretty accurate projections based on your actual earnings history. It shows estimates for claiming at different ages (62, full retirement age, 70) which is super helpful for planning. For other income sources, I found it helpful to make a simple spreadsheet with monthly estimates. Don't forget about things like required minimum distributions if you're getting close to 73 - those can really bump up your income in later years. The key is to revisit and adjust your withholding as your actual income becomes clearer throughout the year.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Schwab, and Vanguard let you update it online anytime, and it typically takes effect on your next distribution. I've adjusted mine 3-4 times in a year when my income situation changed. For Social Security estimates, definitely create an account at ssa.gov and check your Social Security Statement. It gives you projected benefits at different retirement ages based on your actual earnings history. For other income projections, I found it helpful to list out all my expected sources: pension statements usually show monthly amounts, and you can estimate part-time work or rental income based on current rates. One strategy that worked well for me: I started with a slightly higher withholding rate (like 18-20%) for the first few months, then adjusted down once I had a better handle on my actual total income. Much easier than owing a big tax bill! The flexibility to adjust is really one of the benefits of retirement account withdrawals versus W-2 jobs where you're stuck with payroll withholding.

Great questions, Zoe! You can actually change your withholding percentage as often as you want with most brokerages - there's no IRS limit on frequency. I typically review mine quarterly, but you could adjust monthly if your situation is changing rapidly. For Social Security projections, definitely create an account on ssa.gov if you haven't already. Their benefit estimator gives you pretty accurate projections based on your actual earnings history. It shows estimates for different retirement ages too, which is helpful for planning. For other income sources, I found it helpful to create a simple spreadsheet listing all expected income sources with conservative estimates. Don't forget about things like required minimum distributions if you're getting close to 73, or any part-time work you might do in retirement. One thing I learned the hard way - it's much easier to start with slightly higher withholding and dial it back than to scramble with estimated payments if you've under-withheld. The IRS treats withholding as paid evenly throughout the year even if you take larger distributions later, which gives you more flexibility than quarterly estimated payments.

Great questions, Zoe! You can actually change your withholding percentage as often as you want with most brokerages - there's no IRS limit on how frequently you adjust it. I typically review mine quarterly, but you could change it monthly or even per distribution if needed. It usually takes effect on your next withdrawal. For Social Security estimates, definitely create an account at ssa.gov - their benefit estimator is pretty accurate and shows projections based on your actual earnings history. For other retirement income, I found it helpful to gather all my annual statements (401k, pension, etc.) and use their calculators or speak with their customer service. One thing I learned the hard way - don't forget that Social Security might be partially taxable depending on your total income. Up to 85% of your Social Security can be taxable if your combined income exceeds certain thresholds. This caught me off guard my first year and pushed me into a higher bracket than I planned for.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Vanguard, etc. let you update it online and it takes effect on your next distribution. I've adjusted mine 3-4 times per year based on changing circumstances. For Social Security projections, definitely create an account at ssa.gov - their benefit estimator is pretty accurate and shows projected monthly benefits based on different retirement ages. For other income sources, I found it helpful to gather all my statements (401k, IRA, pension summaries) and use a retirement calculator that lets you input multiple income streams. One thing that caught me off guard - Social Security has its own tax implications depending on your other income. Up to 85% of your Social Security can be taxable if your combined income exceeds certain thresholds. This is something to factor into your withholding calculations since it can push you into a higher effective tax rate than you might expect.

Great questions, Zoe! You can actually change your withholding percentage as often as you want - there's no IRS limit on frequency. Most brokerages like Fidelity, Vanguard, etc. let you update it online anytime, and it typically takes effect with your next distribution. I've changed mine 3-4 times in a year when my income situation shifted. For Social Security projections, definitely create an account at ssa.gov if you haven't already. Their benefit estimator gives you pretty accurate projections based on your actual earnings history. It shows estimates for different retirement ages too, which is helpful for planning. For other income sources, I found it helpful to make a simple spreadsheet listing all potential income sources month by month. Include things like: - Social Security (varies by when you start) - Any pension payments - Part-time work income - Required minimum distributions when you hit 73 - Interest/dividend income - Rental income if applicable Once you have that annual total, you can use the tax brackets to estimate what percentage to withhold. I started at 22% my first year, dropped to 18% after seeing how things played out, then bumped back up to 20% when I started Social Security. The flexibility to adjust is really valuable!

@Zoe Alexopoulos Great questions! You can actually change your withholding percentage as often as you want - there s'no IRS limit on frequency. Most brokerages like Fidelity let you update it online and it takes effect on your next distribution. I ve'adjusted mine 3-4 times in a year when my income situation changed. For Social Security projections, definitely create an account at ssa.gov and look at your Social Security Statement. It shows estimated benefits based on different retirement ages. For other income sources, I found it helpful to track everything in a simple spreadsheet - pension statements usually show monthly amounts, and you can estimate part-time work or rental income. One thing that caught me off guard was how Social Security can be partially taxable depending on your total income. Up to 85% of your Social Security benefits can be taxed if your combined income exceeds certain thresholds. This is something to factor into your withholding calculations that many people don t'realize. @Ryan Young s advice'about starting conservative is spot on. I started with 22% withholding my first year and ended up with a small refund, then adjusted down to 18% the following year based on my actual tax situation.