IRA tax withholding

ARTICLE TAKEAWAYS

  • Guidelines for withholding federal and state taxes from traditional, Roth, SEP, SARSEP, SIMPLE IRA and SIMPLE IRA PlusSM distributions

Federal and state tax withholding is a prepayment of taxes for the current tax year.

Federal tax withholding

Federal tax withholding is optional for distributions for IRA owners that have a U.S. residential address on file. IRA owners can elect to withhold a specific dollar amount or a percentage of their distribution.*

At least 10% of the distribution amount must be withheld if:

  • The IRA owner does not provide a withholding election
  • The account address of record is a P.O. Box, care-of address or foreign address, and a permanent U.S. residential address is not provided
     

*For distributions requested online, withholding will be mandatory.

State tax withholding

Some states have guidelines for withholding state income taxes from IRA distributions.

We can withhold taxes for the following states: 

  • Arkansas
  • California
  • Connecticut
  • Delaware
  • District of Columbia
  • Georgia
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Oklahoma
  • Oregon
  • Rhode Island
  • Utah
  • Vermont
  • Virginia
  • West Virginia
  • Wisconsin
     

For all other states, Capital Bank and Trust Company does not withhold state taxes.

For questions about specific state withholding guidelines, refer to State Tax Information for IRAs and Qualified Plans or contact us.

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Use of this website is intended for U.S. residents only.

The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.

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