Updated October 7, 2026. Quick answer: Not unless you ask. Arizona makes withholding on retirement income voluntary: the statute says “Distributions from a retirement account are eligible for withholding”, and Form A-4P is how you ask the payer for it. One caution for a single withdrawal: the Department of Revenue’s withholding page for pension and annuity payments covers regularly scheduled payments and lists “Lump sum distributions” among the payments you “may NOT elect” to have Arizona tax withheld from, so ask the payer whether it will apply Form A-4P to a one-time withdrawal.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Arizona tax withholding on pension payments.
Arizona withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. Withholding happens only if you give the payer a request, and only on the part includable in Arizona gross income |
| Rate or amount | One percentage you check, from 0.5% to 3.5% in half-point steps, plus an optional extra dollar amount per payment |
| How to start or stop it | Form A-4P, given to the payer or retirement account administrator, not to the Department of Revenue |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the form read is the 2025 version |
What the Arizona documents say
The statute, A.R.S. 43-404, extends withholding to pensions, annuities and retirement accounts on request. It says “Distributions from a retirement account are eligible for withholding”, but only to the extent the amount is includable in the Arizona gross income of the person who receives it, so a Roth IRA distribution that Arizona does not tax is outside it.
The Department of Revenue’s form is titled “Request for Arizona Voluntary Income Tax Withholding on Retirement Income”. On it you tell the payer to “Withhold from the taxable amount of payment or distribution at the percentage” you check, and you can add a fixed extra amount per payment. The form also says “You may terminate your voluntary Arizona withholding election at any time”.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 401(k) withdrawal paid to you. The IRS says a taxable eligible rollover distribution paid to you from an employer plan is subject to “mandatory income tax withholding (generally at a rate of 20%)”, which on $50,000 is $10,000 (computed as $50,000 times 20%) held back for federal tax. Arizona adds nothing on its own: with no A-4P on file the Arizona amount withheld is $0. If the payer applied an A-4P to this withdrawal, with the top percentage on the form, 3.5%, checked, it would hold back $1,750 (computed as $50,000 times 3.5%) for Arizona. The lowest choice on the form, 0.5%, would be $250 (computed as $50,000 times 0.5%). Those two amounts are the ends of the form’s range, not a recommendation. Whether a payer applies the form to a one-time withdrawal is the open point, because the Department’s withholding page lists lump sum distributions among the payments that cannot be elected.
The other path is a direct rollover to an IRA or another plan. For federal tax the IRS says “The mandatory withholding doesn’t apply in a direct rollover”. The Arizona documents read do not say how a direct rollover is treated for state withholding, so confirm it with the payer before choosing.
What a mover should know
This page is about Arizona as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it.
What the documents do not say
- The documents read do not say how a direct rollover is treated for Arizona withholding. They state no change for 2026, and the form read is the 2025 version.
- The statute and Form A-4P speak of retirement account distributions, while the Department’s withholding page lists lump sum distributions among the payments you may not elect withholding on; the documents read do not reconcile the two for a one-time withdrawal.
Common mistakes
- Assuming a payer withholds Arizona tax because it withheld federal tax; the form is a request, and without one nothing is withheld.
- Sending Form A-4P to the Department of Revenue; the form goes to the payer.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: how Arizona taxes 401(k) and IRA withdrawals, Arizona retirement taxes, retirement withholding calculator, and retirement taxes by state.
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Answer againSources
- A.R.S. 43-404 Extension of withholding to pensions, annuities, retirement accounts; definitions: https://www.azleg.gov/ars/43/00404.htm
- Request for Arizona Voluntary Income Tax Withholding on Retirement Income (Arizona Form A-4P, 2025): https://azdor.gov/sites/default/files/document/FORMS_WITHHOLDING_2025_A-4P_f.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.