Is there a minimum distribution amount that does not have to have taxes withheld from it. I thought I read somewhere that a distribution under $200.00 does not have to have taxes withheld. This particular one is $3.50.

The amount is $200 ( no w/h required is the total distribution for the year is $200 or less).
For $3.50 you do not even need to report the amount since it is less than $10

If the participant's vested account balance is less than $200, the plan need not provide a direct rollover option and need not withhold on the distribution. Therefore, the plan administrator can make a cash-out distribution of less than $200 without providing distribution paperwork.

Thanks, I was not aware that I did not have to report on a 1099 anything under $10.00

Is that what you mean?

Yes. For reference see page 1 of Inst for filing 1099-R at http://www.irs.gov/pub/irs-pdf/i1099r.pdf