Depending on circumstances, the fiduciary (manager of the account) may be required to withhold 20% or an elected amount of your choosing; like from your paycheck. It is a payment of tax to the IRS, your income tax form is a true-up/reconciliation of what happened during the year - all income, less deduction/adj(s) to figure tax liability then you get potential credits, including prepayments/withholdings to figure amount due/refund.
