"Can I delay paying the 20K federal tax until December of 2025 by using a 20K withdrawal from the Traditional IRA and have 100% of that go to Federal Taxes without incurring a under withholding penalty."
Yes, a large enough amount of tax withholding in December 2025 will avoid underpayment penalties that would otherwise be caused by the large distribution in January 2025. Be aware that some IRA custodians do not permit your entire distribution to be allocated to tax withholding but may limit it to something like 90% of the distribution. Don't forget about state tax withholding. The states that I'm familiar with generally work the same way, but some could differ. To make sure I will have had enough taxes withheld by the end of the year, before the end of the year I generally prepare a simulated tax return using the download version of TurboTax.
By default, tax withholding is treated as having been paid evenly throughout the year. This means that a $20k distribution in December 2025 that goes entirely to tax withholding will cover some of the tax obligation for each of the earlier quarters of the year. If the amount applied to each of the earlier tax quarters is sufficient to cover the quarterly obligation based on your 2024 tax liability, you'll have no underpayment penalty for those quarters. (Without the safe-harbor of basing your quarterly obligations on your 2024 tax liability, you would have underpayments for each of the quarters due to the large January 2025 distribution.) If your 2024 AGI is over $150,000 ($75,000 if married filing separately), the safe-harbor is 110% of your 2024 tax liability, otherwise it's 100%.
Note that estimated tax payments that you make directly to the Treasury (with Form 1040-ES, not though tax withholding) are treated as paid when actually paid, so a large estimated tax payment in December would not cover any of the underpayment for earlier tax quarters.
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