Hello!
The 20% is the standard amount brokerages tend to withhold from pension/IRA payouts. Of course, the amount of your distribution/withdrawal is going to determine the final amount of tax rate on the distribution. You always have the option to change the 20% amount by advising the manager of your plan. The best way is to provide them with a completed, signed Form W4P. I have included a link to the fillable form on IRS's website below for your convenience.
If you have online access to your retirement account, you may be able to complete the W4P information right in your account.
Link for W4P: www.irs.gov/pub/irs-pdf/fw4p.pdf
If you're unsure of the amount to withhold, I encourage you to use our TaxCaster application (link below). It will aid you in determining the accurate amount.
Link for TaxCaster: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
Let me know if you have other questions.
Regards,
Elizabeth W
EA for 29 years
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There is a 20% minimum federal tax withholding requirement on all distributions paid to you that are eligible for rollover from an employer plan like a pension. If you choose to have the payment made as a direct rollover to another qualified retirement like an IRA, there is no mandatory tax withholding.