Updated October 7, 2026. Quick answer: Not unless you ask and the payer agrees. The State Tax Commissioner’s guideline says “Non-wage payments are not subject to North Dakota income tax withholding” apart from three listed types, and withholding may be voluntary.
North Dakota withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. Non-wage payments are not subject to withholding apart from three listed types; withholding is voluntary |
| Rate or amount | You may choose a percentage or a dollar amount; if you name none, the payer multiplies the payment by 2.5% |
| How to start or stop it | Ask the payer; the guideline read names no state form for it |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the guideline read is the 2026 edition |
What the North Dakota documents say
The Office of State Tax Commissioner’s Income Tax Withholding and Information Returns Guideline sets a general rule for non-wage payments, the category a pension or retirement-plan payment falls in. Voluntary withholding applies “if the payment recipient requests it and the payor agrees to withhold”.
On the amount, the guideline says the recipient chooses a percentage or a dollar figure, and that if none is given the payer should “multiply the payment by 2.5%”. The Century Code adds a rule for the payer: “if any person has withheld state income tax from an interest”, dividend, pension or annuity payment, that person is treated as an employer for the withholding and reporting sections.
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. North Dakota adds nothing on its own: the North Dakota amount withheld is $0 unless you ask and the payer agrees. If you named no amount and the payer agreed, the guideline’s default would be $1,250 (computed as $50,000 times 2.5%) for North Dakota.
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 North Dakota 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 North Dakota 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 guideline speaks of non-wage payments generally and does not name an IRA or 401(k) case, names no state election form, and does not address a direct rollover. No change is stated for 2026.
Common mistakes
- Assuming the 2.5% default applies automatically; it applies only after a request the payer has agreed to.
- Looking for a state form; the guideline read names none.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: how North Dakota taxes 401(k) and IRA withdrawals, North Dakota 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 through this service, 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
- Income Tax Withholding & Information Returns Guideline: https://www.tax.nd.gov/sites/www/files/documents/guidelines/business/it-withhold/income-tax-withholding-information-returns-guideline.pdf
- North Dakota Century Code chapter 57-38, Income Tax: https://ndlegis.gov/cencode/t57c38.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.