@sridharm
How much are the earnings that we are talking about? Remember that they will be added to your taxable income for 2022, so if they change your tax significantly, you might need to pay estimated taxes or have some withholding.
For example, if the earnings are $500, you might owe $150-$250 more tax than you expect (depending on your other income). If that is less than your normal refund amount, then those new taxes will simply decrease your refund, and you don’t really need to have any back up withholding. However, if the earnings were $10,000, then the taxes might be $2500-$4000, and you might not only need the 10% withholding but to make an additional estimated tax payment.
It depends on the amount of the earnings that are being withdrawn, your other income, and your age.
