Thank you for your question. If your goal is to not owe taxes at the end of the year, tax withholding on sources of income other than a W-2 is a great idea.
Stock generally has a basis, which is what you paid to acquire the stock in the first place, so if this is stock in a brokerage account then the full amount withdrawn would not be taxable. If so it may also be a long-term capital gain that could be taxed at 0%, 15% or 20%.
If this is stock in a pre-tax retirement account and this is a distribution then the 20% tax rate withholding may be appropriate. If you are under the age of 59.5 then you also want to account for the 10% penalty for an early distribution. Not all states tax (Illinois, Iowa, Mississippi and Pennsylvania) distributions from retirement accounts, so state withholding may not be necessary . Also only a few states (California, New Jersey and New York) and DC have marginal tax brackets exceeding 10%, so this may be too high.
Ultimately you may want to complete a more refined calculation by using these Turbo Tax resources:
TurboTax's W-4 Calculator
TurboTax's Tax Caster tax calculator
Be well and safe @Bissawo
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