Generally yes, if the withholding belongs to the same taxpayer and tax year. Federal income tax withheld from an inherited IRA cash distribution can help pay the annual tax bill, including tax generated by a Roth conversion in another account. Ask the custodian about your Form W-4R withholding election.
For estimated-tax penalty calculations, withholding is generally allocated one-fourth to each payment period. You may instead establish and use the actual withholding dates; that choice changes the effect of late-year withholding. Avoid assuming every year-end payment is treated this way: an estimated-tax payment is different.
Include the inherited IRA distribution’s own taxable amount in your projection. Extra withdrawals can increase the bill you are trying to pay. Compare total withholding and estimated payments with the applicable safe-harbor requirements. Avoiding an underpayment penalty does not mean your final balance due is zero.
Primary sources
Publication 505 (2026), Tax Withholding and Estimated Tax | Internal Revenue Service