Updated October 7, 2026. Quick answer: Not unless you ask. Montana’s Publication 1 says that on a pension, annuity or IRA payment “you may choose to pay estimated taxes on the amount” or “have the remitter withhold a flat amount of taxes every distribution period”, using Form MW-4.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Montana tax withholding on pension payments.
Montana withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. You choose between estimated tax payments and a flat withholding amount |
| Rate or amount | A flat dollar amount for each distribution period, entered on line 4 of Form MW-4; the payer need not withhold if it is under $10 |
| How to start or stop it | Form MW-4 to the payer; a new form changes or revokes it at any time |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | The 2026 Form MW-4 is the current version; no rate change is stated |
What the Montana documents say
The Department of Revenue’s Publication 1, the guide to Montana withholding and estimated payments, says that for pension, annuity and IRA income “you may choose to pay estimated taxes on the amount”, or “have the remitter withhold a flat amount of taxes every distribution period”.
The publication adds that “The withholding can be changed or revoked at any time” and that the payer is not required to withhold if the “amount of tax withholding is less than $10”. The 2026 Form MW-4 lets you “ask the payer to withhold a flat amount that you report”.
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. Montana sets no percentage: the Montana amount withheld is $0 unless you give the payer a Form MW-4 with a flat amount, which it need not withhold if that amount is under $10. The alternative the publication names is paying estimated tax yourself.
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 Montana 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 Montana 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 Montana withholding, cite no statute section, and state no rate change for 2026.
Common mistakes
- Expecting a percentage on Form MW-4; Montana withholding on retirement income is a flat dollar amount.
- Relying on withholding alone when the publication names estimated tax payments as the other route.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: how Montana taxes 401(k) and IRA withdrawals, Montana retirement taxes, retirement withholding calculator, and retirement taxes by state.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for retirement withdrawals
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
Opens on WiserAdvisor’s site in a new tab.
See how an advisor plans your withdrawals
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- 2025 Montana Publication 1: A Guide to Montana Tax Withholding and Estimated Payments and Worksheets: https://revenuefiles.mt.gov/files/Forms/Prepaying_Income_Tax_Publication_1.pdf
- 2026 Montana Employee’s Withholding and Exemption Certificate (Form MW-4): https://revenuefiles.mt.gov/files/Forms/Montana_Employee_Withholding_Allowance_and_Exemption_Certificate_Form_MW-4.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.