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Distribution and Notice of Withholding Terms

As noted in the Distribution and Notice of Withholding Form.

Terms:

Distribution Types

  • Required Minimum Distribution: Effective December 31, 2022, the age triggering the required beginning date (RBD) will increase from 72 to 75.  This will be done in three phases.  Age 73—for individuals who attain age 72 after 2022 and age 73 before 2029.  Age 74—for individuals who attain age 73 after 2028 and age 74 before 2032.  Age 75—for individuals who attain 74 after 2031.  RMDs generally must begin by April 1 of the calendar following the calendar year in which the individual, employee, or IRA owner reaches their RBD.  Please reach out to a trusted tax advisor or CPA should you have any questions regarding SECURE Act 2.0.   Please note, you delay your initial RMD until April 1st the following year you will be responsible for taking two distributions that year, one by April 1st and one by December 31st. For each subsequent year, you are required to take your RMD by December 31st.  

  • Normal Distribution: is available if the Account Holder is age 59.5 or older as of the date of the distribution.  

  • Premature Distribution: is available if the Account Holder is under the age of 59.5 and not disabled; please note that your distribution may be subject to early withdrawal penalty; please also note that if this is a SIMPLE IRA and the distribution is within the two-year period in which you participated in your employer’s SIMPLE IRA plan; the distribution may be subject to a twenty-five percent (25%) premature distribution penalty.  

  • Inherited Account Distribution: can be elected only if a completed Inherited IRA Election Form is on file with NDTCO.  

  • Rollover Distribution: If you have elected to take your distribution as a Rollover, a Letter of Acceptance from receiving institutions is required; only one rollover can be performed within a 12-month period for your IRA account.  

  • Health Savings Account Distribution: for qualified medical expense reimbursement.  

  • Permanent Disability Distribution: If you have elected to take a Permanent Disability Distribution, please ensure that you qualify as such under IRC Section 72(m)(7). Please note that NDTCO does not provide calculations for earnings attributable to the removal of excess.  

  • Distributions to Terminally Ill Individuals: If you have elected to take a Distribution based on a terminal illness, please ensure that you qualify as such under SECURE Act 2.0.  Please note that relief may be conditioned upon the individual furnishing sufficient evidence of the terminal illness to the plan administrator in such a form and manner as determined by the Secretary of the Treasury.  

  • Qualified Disaster Recovery: Amount can be up to $22,000—effective for distributions taken with respect to qualified disasters the incident period of which begins on or after January 26, 2021.  If you have elected to take a Qualified Disaster Recover distribution, please ensure that you qualify under SECURE Act 2.0.  

If your distribution request is received by midnight on December 31st, the distribution can still be processed for that tax year even if the processing takes place after January 1st; however, NDTCO's cutoff date for processing tax withholding on distribution is December 31st. 

In-Kind Distributions

In-Kind distributions: Any paperwork will be sent to the account holder’s residential address on file. Please submit a completed Fair Market Value Form and supporting documents along with your distribution request.  Please note that In-kind distributions can be completed into the next tax year, however there will be no taxes withheld. 

Real estate distributions: An appraisal within one year is required and a drafted, unsigned deed.  

Precious metals distributions: You will be contacted by NDTCO if shipping costs for sending your metals exceed $200. We will use the current market value for your distribution as of the signature date of the form; a Fair Market Value Form is not required. 

Authorization and Signature

I authorize NDTCO to process the distribution from the account indicated on this form.  I understand that NDTCO will not process personal distributions within 60 days of account opening; funding a new investment does not fall into this category. I understand and agree that the role of NDTCO is limited, and its responsibilities do not include determining the appropriateness of my distribution request.  I understand and agree that NDTCO has not provided or assumed responsibility for any tax or legal advice with respect to my distribution request, and I agree that they will not be liable for any loss or tax liability which results from my decision to request this distribution.  I understand and agree that NDTCO has not reviewed, nor will they review, the merits, legitimacy, appropriateness or suitability of this distribution request, and I certify that I have done my due diligence prior to submitting this request.  I understand and agree that NDTCO does not determine whether this distribution is acceptable under the Employee Retirement Income Securities Act (ERISA), the Internal Revenue Code (IRC) or any applicable federal, state, or local laws.  I understand that it is my responsibility to review any distribution request I make to ensure compliance with these requirements.  I understand that NDTCO makes every effort to obtain information about withholding laws, and that it does not guarantee the accuracy or the timeliness of the tax withholding information we provide.  The information provided above is not intended to serve as tax or legal advice, and NDTCO strongly recommends that you contact your tax advisor regarding your tax withholding elections and to obtain the most current information about tax withholding laws. While NDTCO makes every effort to obtain information about state tax laws from sources believed to be reliable, it cannot guarantee the accuracy or timeliness of state withholding information because state tax laws are subject to constant change and interpretation.  Therefore, I understand and agree that I should consult my tax advisor for guidance on all the limitations/restrictions for state tax withholding.  I understand and agree that it is my responsibility to provide NDTCO with my states W-4P form should one be required because of my withholding request. I agree to indemnify and hold harmless NDTCO from all, claims, damages, liability, actions, costs, expenses (including reasonable attorneys’ fees), for any loss to my account as a result of any action taken in connection with this distribution request or resulting from NDTCO serving as my custodian for my account asserted by me. I understand that if I elect to not have my federal income tax withheld, I am liable for payment of federal income tax on any taxable portion of my distribution.  I understand that I may be subject to tax penalties under the estimated tax payment rules if my payment of estimated tax and withholding are not adequate. 

 

Federal Tax Withholding

If no percentage is selected, NDTCO is required to withhold at a default 10% withholding rate from the taxable amount no exceptions.  

You may choose to have no federal income tax withheld by entering “-0- “in the withholding section.  Generally, you are not permitted to elect to have income tax withheld at a rate of less than 10% (including -0-) on any payments to be delivered outside the United States.  Please note that if you choose to have too little tax withheld, you could owe tax when you file your tax return and may owe a penalty unless you make a timely of estimated tax.  If too much tax is withheld, you will generally be due a refund when you file your tax return.  Your withholding choice (or an election not to have withholding) will generally apply to any future payment from the same IRA or plan.  Please submit another Distribution and Notice of Withholding form if you want to change your choice. 

State Tax Withholding

Residents of IA, MA, MD, ME, NE, OK and VT: If federal tax is withheld, state tax withholding is mandatory. NDTCO will automatically withhold the minimum required by your state unless you specify a higher amount below.  

Residents of AR, CA, DE, KS, MI, NC, NM (voluntary), and OR: State income tax withholding is required when federal withholding is elected or taken by default.  IA your state’s W-4P form is required any time state income tax withholding is elected (including when federal withholding occurs).  If you are required to submit your states W-4P Withholding form, it can be found on your state’s government website, not the IRS website.   

Residents of MS and CT: If federal tax is withheld, state tax withholding is mandatory if your distribution is subject to the federal early withholding penalty. NDTCO will automatically withhold the minimum required by your state unless you specify a higher amount below.    

Residents of all other states: If you aren’t a resident of a state listed above, state tax withholding isn’t available for you at this time.