Updated October 7, 2026. Quick answer: Yes, unless you opt out. The Employment Development Department’s Form DE 4P says “Unless you elect otherwise, state law requires that California Personal Income Tax” (PIT) be withheld from payments of pensions and annuities, and that covers IRAs: withholding applies to payments “from Individual Retirement Arrangements (IRA), and from commercial annuities”.
Drawing a pension? Whether the state withholds tax from it, from its own documents: California tax withholding on pension payments.
California withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | Yes, unless you elect otherwise; not withheld from pension recipients who live outside California |
| Rate or amount | The payer may use the California withholding schedules, a dollar amount you designate, or ten percent of the federal withholding |
| How to start or stop it | Form DE 4P (or federal Form W-4P or a payer form); it is usually effective 30 days after you file it and stays in effect until you change or revoke it |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | The current DE 4P is Rev. 46 (1-26); the documents describe no rule change |
What the California documents say
Form DE 4P, the Withholding Certificate for Pension or Annuity Payments, says it allows you to “Elect not to have California PIT withheld from your periodic”, or nonperiodic, pension or annuity payments, or to elect withholding based on a filing status and allowances or a designated dollar amount. It adds that “Your certificate is usually effective 30 days after you file the form”.
The Employment Development Department’s information sheet for payers, DE 231P, says the payer may figure the tax with the California withholding schedules, a dollar amount the recipient designates, or “Ten percent of the amount of federal withholding” computed under section 3405 of the Internal Revenue Code. That sheet is dated 2019, and the 2026 DE 4P is the newer document.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 401(k) withdrawal paid to you with no DE 4P on file. 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. If the payer uses the ten percent method, California withholding is ten percent of that federal amount: $1,000 (computed as $50,000 times 20% times ten percent). A payer using the schedules or a dollar amount you designate would withhold a different figure.
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 form does address one case for movers: it says California PIT is “not to be withheld from pension recipients who reside outside of California”. Its treatment of a direct rollover is not stated in the documents read.
What a mover should know
This page is about California 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, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The DE 231P payer sheet is from 2019. The documents read do not say how a direct rollover is treated, and the Revenue and Taxation Code and regulation sections they cite were not archived.
Common mistakes
- Assuming the ten percent method is the only one; the payer may instead use the schedules or a dollar amount you designate.
- Filing a new DE 4P and expecting it to apply at once; the form says it is usually effective 30 days after you file it.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state withholding on retirement withdrawals, how California taxes 401(k) and IRA withdrawals, California retirement taxes, and retirement withholding calculator.
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Answer againSources
- Withholding Certificate for Pension or Annuity Payments (DE 4P Rev. 46 (1-26)): https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de4p.pdf
- Withholding From Pensions, Annuities, and Certain Other Deferred Income (DE 231P Rev. 9 (9-19)): https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de231p.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.