The custodian takes out a minimum of 20% for federal taxes, but you can request that more be taken out to avoid an underpayment penalty. The sum of income tax and early-distribution penalty resulting from this distribution is likely to be *more* than 30% in total; the marginal tax liability from this distribution and your balance due is not determined until you prepare your tax return and this income is combined with your other income and deductions. If you wait until tax time to pay a balance due you might incur an underpayment penalty.
