Estimate net or gross distribution after federal tax, state tax, penalty withholding, and flat fees based on filing status and tax rates.
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Gross Distribution Formula
The calculator uses one of three formulas depending on the tab you select.
Gross up net:
Gross = Net / (1 - Rate)
From statement:
Gross = Net Deposit + Tax Withheld + Other Deductions
Net from gross:
Net = Gross * (1 - Rate) - Other Deductions
- Gross = total distribution before any tax or fees
- Net = amount you actually receive
- Rate = tax withholding rate as a decimal (20% = 0.20)
- Tax Withheld = dollar amount of tax taken out
- Other Deductions = plan fees, loan offsets, or other amounts withheld
The gross-up formula assumes withholding is the only adjustment between gross and net. If your distribution also has fixed dollar fees, use the From statement tab instead. The rate must be below 100% for the gross-up formula to work.
Common Withholding Rates and Effective Net
Federal default withholding rates vary by distribution type. State withholding may add to these.
| Distribution Type | Default Federal Rate |
|---|---|
| Eligible rollover (paid to you) | 20% mandatory |
| Direct rollover (trustee to trustee) | 0% |
| Periodic IRA distribution | 10% (can elect out) |
| Non-periodic 401(k) distribution | 10% to 22% typical |
| Lump sum to non-resident alien | 30% (treaty may reduce) |
| Backup withholding | 24% |
This table shows the gross amount needed to produce a $1,000 net check at common rates.
| Withholding Rate | Gross for $1,000 Net | Tax Withheld |
|---|---|---|
| 10% | $1,111.11 | $111.11 |
| 20% | $1,250.00 | $250.00 |
| 22% | $1,282.05 | $282.05 |
| 24% | $1,315.79 | $315.79 |
| 30% | $1,428.57 | $428.57 |
| 37% | $1,587.30 | $587.30 |
Example and FAQ
Example. You need $5,000 in your bank account from an IRA withdrawal. Your withholding election is 20%. The required gross distribution is 5,000 / (1 - 0.20) = $6,250. The custodian withholds $1,250 in tax and sends you $5,000.
Why is gross higher than net plus the rate applied to net? Tax is calculated on the gross amount, not the net. Adding 20% to a $5,000 net only gives $6,000, which would withhold $1,200 and leave $4,800. You have to divide by (1 - rate) to land on the right gross figure.
Does this account for state tax? Only if you include state tax in the rate or in Other deductions. If your state withholds 5% on top of 20% federal, enter 25% as the combined rate.
Does withholding equal what you actually owe? No. Withholding is a prepayment. Your final tax liability is settled when you file your return, and you may owe more or get a refund.
