Limited time offer: Sign up today and get up to 1 year managed free. See details

Get your next rollover managed free in 2018. Learn how to enroll

Tax Withholding Notices

Notice for Traditional IRAs, SEP IRAs, and SIMPLE IRAs

Tax withholding notice: No action required. The IRS requires us to provide the following information on income tax withholding for withdrawals/distributions from your Traditional/SEP/Simple IRA.

For U.S. citizens or resident aliens:

Unless you instruct us not to withhold federal taxes, the IRS requires us to withhold at least 10% of your withdrawals from Traditional/SEP/Simple IRAs for federal income taxes.

When you request a distribution you can:

  • Let us automatically withhold 10% of the distribution.
  • Ask us to withhold more than 10% of the distribution.
  • Ask us not to withhold taxes at all.

If you choose not to withhold taxes, you will still owe federal income tax on the taxable portion of your Traditional/SEP/Simple IRA distributions. You may be subject to a 10% early withdrawal penalty unless an exception applies. You may have to make estimated tax payments. If your estimated payments and withholdings do not satisfy your tax obligations, you may be subject to IRS penalties.

Betterment is not a tax advisor, and the information provided here should not be construed as tax advice. It should only be used for informational purposes. Please consult a qualified tax professional to determine the rules that apply to your individual tax situation.

Notice for Roth IRAs

Tax withholding notice: No action required. The IRS requires us to provide the following information on income tax withholding for withdrawals/distributions from your Roth IRA.

For U.S. citizens or resident aliens:

Unless you instruct us to withhold federal taxes, the IRS requires us to withhold 0% of your withdrawals from Roth IRAs for federal income taxes.

When you request a distribution you can:

  • Let us automatically withhold 0% of the distribution.
  • Ask us to withhold 10% or more of the distribution.

If you choose not to withhold taxes, you will still owe federal income tax on any taxable portion of your Roth IRA distributions. You may be subject to a 10% early withdrawal penalty unless an exception applies. You may have to make estimated tax payments. If your estimated payments and withholdings do not satisfy your tax obligations, you may be subject to IRS penalties.