Traditional IRA in-kind distribution mutual fund

[TIMLWAN]

Need to take an in-kind distribution from my traditional IRA mutual fund account.

Question...how to pay ordinary income tax on those securities

A.  wait until I file my tax return in March 2023 ,

         OR

B.  file estimate tax now.

[Joe_D-CPA-PFS-CFP]

Hi TIMLWAN,

Thanks for the question. Any withdrawal from an IRA will be taxed at your ordinary income tax rate. Oftentimes, when making a distribution from an IRA the broker dealer requires you to fill out a form. On the form there should be an option to have them withhold tax. It is very common.

Another option would be to make an estimated tax payment. Her is the IRS site that explains how to do this. By far the easiest option is to check with the custodian of the IRA. If by chance you have enough withholding from other sources or your tax liability won't exceed $1,000 after the distribution, there is no penalty.

Please feel free to follow up with additional questions if needed.