Tax withholding on an IRA distribution is limited to the available cash. With the entire distribution being in-kind there will be no cash to withhold for taxes. If you obtain a distribution in-kind rather than doing a trustee-to-trustee transfer and you choose not to roll the shares over to another traditional IRA within 60 days, you'll have to either increase your tax withholding from other sources or make an estimated tax payment to make up any amount needed to avoid a tax underpayment penalty.
The additional tax withholding can normally be done any time during the tax year but, because estimated taxes are only credited when paid, you'll want to make an estimated tax payment for the tax quarter in which the in-kind distribution occurs.
