Updated October 7, 2026. Quick answer: Not unless you ask in writing. Indiana’s Department of Revenue says the payer withholds from retirement distributions “if the payee makes such a request”, using Form WH-4P.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Indiana tax withholding on pension payments.
Indiana withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. The payer withholds state and county tax only if the payee makes a written request |
| Rate or amount | A flat whole-dollar amount per payment that you choose; the payer need not withhold an amount under $10.00 |
| How to start or stop it | Form WH-4P (State Form 37365), given to the payer, not to the Department of Revenue |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the form read is revision R4 / 11-25 |
What the Indiana documents say
Income Tax Information Bulletin #13 covers withholding on pensions and annuities and cites “References: IC 6-3-4-15.7”. It says withholding applies only on request: “The request for withholding remains valid until the payee changes or revokes” it.
The form is Form WH-4P, Annuitant’s Request for State and County Income Tax Withholding. On it you write “I request voluntary income tax withholding from my annuity or pension payments”. The instruction on the form is “Send this form to the person or company paying your pension”, not to the Department of Revenue.
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. Indiana sets no percentage: the Indiana amount withheld is $0 unless you file a WH-4P, and then it is the whole-dollar amount you write on the form, which the payer need not withhold if it is under $10.00.
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 Indiana 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 Indiana 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 Indiana withholding. The two bulletins read are from 2022; the form is the R4 / 11-25 revision.
Common mistakes
- Looking for a percentage on Form WH-4P; Indiana asks for a flat dollar amount per payment.
- Sending the form to the Department of Revenue; it 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 Indiana taxes 401(k) and IRA withdrawals, Indiana retirement taxes, retirement withholding calculator, and retirement taxes by state.
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Answer againSources
- Income Tax Information Bulletin #13: https://secure.in.gov/dor/files/ib13.pdf
- Form WH-4P, Annuitant’s Request for State and County Income Tax Withholding: https://forms.in.gov/Download.aspx?id=2464
- 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.