The tax system is pay-as-you go, and if you don't pay enough into the system during the year (2023, in your case), then you can be assessed a penalty for underpayment, even if you pay in full when you file your tax return in 2024.
There is likely a mandatory 10% withholding, but your actual tax is likely to be 22%-32% federal plus 5%-13% for state, depending on your income and your state. You can satisfy the requirement to pay as you go by either increasing the withholding on the withdrawal or by making an estimated tax payment. If you have a lump sum of income in January 2023 (for any reason, not just an IRA withdrawal) you are required to make an estimated tax payment before April 15, 2023 (or have extra withholding at the time of the withdrawal). The actual tax due is calculated on your 2023 tax return that you will file in 2024 (on or before April 15, 2024). If you under-paid your estimate, you will owe more tax, and if you overpaid your estimate, the excess will come back to you as a refund.
To avoid a penalty for underpayment, your 2023 tax payments (from withholding and estimated payments) must meet one of these three tests:
a. you pay enough so that you owe less than $1000 when you file your return
b. your payments are at least equal to 90% of your current year tax liability
c. your payments are at least equal to 100% of the previous years tax liability (or 110% of the previous year's tax liability for high income taxpayers).
Your tax liability is what the government kept last year. So if you had $4000 of withholding and paid an additional $1000, your tax liability was $5000. Likewise, if you had $6000 of withholding and got a $1000 refund, your liability was $5000.
