If you exceed 90% of your 2025 total tax liability, you are likely safe from penalties, even if your IRA distributions and tax payments don’t align perfectly with the quarterly schedule. This is because the IRS treats tax withholdings as if they were paid evenly throughout the year — regardless of when they were actually withheld. So even if you make a large withholding in December, it counts as if it were paid quarterly.
Like the IRS, the FTB treats tax withholding as being made evenly throughout the year. If you meet the CA Safe Harbor threshold using withholding from your IRA, you should avoid the CA underpayment penalty as well.
I would recommend that before the end of the year (and definitely before the January 15th deadline), confirm with your Vanguard custodian the total dollar amount of tax withheld on all your IRA distributions for 2025. Use the IRS Tax Withholding Estimator to check if you're on track.
@turbomjstax Thanks for the question!!
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