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IRA Withdrawal Timing Trick Lets Taxes Count From January

Original: Take $60,000 From an IRA in May and Send the IRS Nothing All Year, Then Take Another $20,000 in December With All of It Withheld, and the IRS Counts It as Paid Since January

A personal finance strategy is drawing attention: withdraw $60,000 from an IRA in May with nothing withheld, then take another $20,000 in December with full withholding. Under IRS rules, withholding is treated as paid evenly throughout the year, so the December withholding can cover the earlier withdrawal's tax liability and help avoid estimated-tax penalties.

Why now: People are interested in a legal tax-timing tactic that uses withholding rules to avoid underpayment penalties on retirement withdrawals.

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Evidence

• Take $60,000 From an IRA in May and Send the IRS Nothing All Year, Then Take Another $20,000 in December With All of It Withheld, and the IRS Counts It as Paid Since January · 24/7 Wall St.

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