If you withdrew from your IRA prior to age 59 and 1/2 (6 months) there is a 10% penalty. Appears that you instructed Prudential to withhold federal taxes of 25% (assuming federal or was a portion state). You should have a tax form from Prudential detailing your withdrawal and subsequent payment of taxes which should be entered on your return. Unfortunately the 10% penalty is not a pre-payment of taxes - it is a simple penalty.