Q. I just asked for an age-based withdrawal. I understand 20 percent withholding will take place. Will they tax the whole amount again as income when I file for taxes, or is the 20 percent withholding applied toward the taxes I’ll owe as it is considered income? I’ve heard I’ll only see about 50 percent of my withdrawal before it’s all over.
A: The withholding, like all tax withholding, is a deposit against your future tax liability. The tax you owe on your withdrawal will be calculated on your tax return, and the withholding will be credited against that liability.
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