Some states require a certain amount of taxes be withheld upon distribution. Depending on your state, the amount may be a percentage of the Federal Withholding amount or a percentage of the gross amount.
Some states make the tax withholding optional. Thus, you may not have to elect an amount to withhold prior to distribution.
If you elect to enter your own dollar amount to withhold, instead of the percentage of federal or gross distribution amount, then the dollar amount you enter needs to be higher than the state's given percentage.
Tip: You may live in a state that doesn't withhold a percentage of taxes. To find out more, check with your state's Department of Revenue.