State Tax Withholding for Withdrawals on IRAs and Qualified Plans

When you withdraw money from your IRA or employer-sponsored retirement plan, your state may require you to have income tax withheld from your distribution.

Your withholding is a pre-payment of your state income tax that serves as a credit toward your current-year state income tax liability.

Your state withholding may be affected by the following criteria:

  • Type of retirement plan (IRA or qualified retirement plan)
  • State of residence for tax purposes
  • Eligibility to roll over a distribution
  • Distribution amount (a minimum amount may apply)
  • Type of distribution (single sum or periodic payments)

Each state’s requirements are different. You should consult your tax advisor or financial professional to understand your state’s withholding requirements.

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Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.

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American Funds Distributors, Inc., member FINRA.

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