Mandatory withholding on distribution of property

If a participant takes an in-service distribution (not hardship nor RMD) of property from a 401(k) plan, how is the 20% mandatory withholding handled? Does the participant have to also take a cash distribution equal to 20% of the property value so that can be withheld 100% for taxes?

With other sources, consider these:

26 C.F.R. § 31.3405(c)-1

Q-9:  If property other than cash, employer securities, or plan loans is distributed, how is the 20-percent income tax withholding required under section 3405(c) accomplished?

A-9:  When all or a portion of an eligible rollover distribution subject to 20-percent income tax withholding under section 3405(c) consists of property other than cash, employer securities, or plan loan offset amounts, the plan administrator or payor must apply § 35.3405-1, Q&A F-2 of this chapter and may apply § 35.3405-1, Q&A F-3 of this chapter in determining how to satisfy the withholding requirements.

https://www.ecfr.gov/cgi-bin/text-idx?SID=09d0f249e07e4922fa5624172ffa413f&mc=true&node=se26.17.31_13405_2c_3_61&rgn=div8

26 C.F.R. § 35.3405-1T

f-2.

Q.  How is withholding accomplished if a payee receives only property other than employer securities?

A.  A payor or plan administrator must satisfy the obligation to withhold on distributions of property other than employer securities even if this requires selling all or part of the property and distributing the cash remaining after Federal income tax is withheld.  However, the payor or plan administrator may instead permit the payee to remit to the payor or plan administrator sufficient cash to satisfy the withholding obligation.  Additionally, if a distribution of property other than cash includes property that is not includible in a designated distribution, such as the distribution of U.S. Savings Bonds or an annuity contract, such property need not be sold or redeemed to meet any withholding obligation.

f-3.

Q.  If a designated distribution includes cash and property other than employer securities, is it permissible to satisfy the withholding obligation with respect to the entire distribution by using the cash distributed, provided the cash distributed is sufficient to satisfy the withholding obligation?

A.  Yes, as long as there is sufficient cash to satisfy the withholding obligation for the entire distribution.  There is no requirement that tax be withheld from each type of property in portion to its value.

https://www.ecfr.gov/cgi-bin/text-idx?SID=09d0f249e07e4922fa5624172ffa413f&mc=true&node=se26.17.35_13405_61t&rgn=div8

Wonderful, thank you so much!

Can you Trustee to Trustee transfer to an IRA, then withdraw from there?  No withholding from IRAs.