The 20% "rule of thumb" is a very rough guess. An IRA withdrawal is not taxed at a fixed rate. It's taxed as ordinary income, the same as pay from a job. The tax rate on the IRA withdrawal will depend on your other income, your filing status, and other factors. And if it happens to not all fall in the same tax bracket, it will not all be taxed at the same rate. You can use TaxCaster to get a somewhat better estimate of how much your tax will increase because of the IRA withdrawal. And don't forget that 10% penalty if it applies to you.
There is an additional complication if you are going to take more money out of the IRA "to cover taxes." That additional amount that you take out is also added to your taxable income. You have to pay tax on the additional amount that you take out to cover taxes. So it increases your tax even more.
