Updated October 7, 2026. Quick answer: Not unless you ask. New Jersey’s Form NJ-W-4P is a “CERTIFICATE OF VOLUNTARY WITHHOLDING OF NEW JERSEY GROSS INCOME TAX”, used to “begin, change, or stop withholding New Jersey Income Tax”.
Drawing a pension? Whether the state withholds tax from it, from its own documents: New Jersey tax withholding on pension payments.
New Jersey withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. The form is a certificate of voluntary withholding |
| Rate or amount | A whole-dollar amount of $10 or more for each payment, from a worksheet; no percentage |
| How to start or stop it | Form NJ-W-4P, mailed to the payer; check the box to stop withholding |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the form read is revision 04-17 |
What the New Jersey documents say
The Division of Taxation’s Form NJ-W-4P is titled “CERTIFICATE OF VOLUNTARY WITHHOLDING OF NEW JERSEY GROSS INCOME TAX” from pension and annuity payments. You use it to “begin, change, or stop withholding New Jersey Income Tax”.
The form sets the amount rule: “Enter a whole dollar amount of $10 or more for each payment”. It tells you to “Mail this form to the payer of your pension or annuity”, and not to request withholding if you do not expect to owe New Jersey tax: “do not request to have New Jersey Income Tax withheld” in that case.
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. New Jersey sets no percentage: the New Jersey amount withheld is $0 unless you file an NJ-W-4P, and then it is the whole-dollar amount you enter, at least $10 per payment.
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 New Jersey 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 New Jersey 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 form read is the 04-17 revision, so it is an older edition. It does not address a direct rollover, cites no statute, and states no change for 2026.
Common mistakes
- Requesting New Jersey withholding when you expect no New Jersey tax; the form says not to.
- Expecting a percentage choice; the form asks for a dollar amount per payment.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: how New Jersey taxes 401(k) and IRA withdrawals, New Jersey retirement taxes, retirement withholding calculator, and retirement taxes by state.
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Answer againSources
- Form NJ-W-4P Certificate of Voluntary Withholding of New Jersey Gross Income Tax from Pension and Annuity Payments: https://www.nj.gov/treasury/taxation/pdf/current/njw4p.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.