Updated October 16, 2026. Quick answer: Not on regular payments. Since January 1, 2025 Connecticut payers are not required to withhold from periodic pension and annuity payments, and they withhold only if you ask on Form CT-W4P; for a lump sum the form says payers are still required to withhold, at 6.99% if no CT-W4P is on file, unless any portion was previously subject to tax (such as a Roth 401(k) or Roth IRA distribution) or the distribution is a trustee-to-trustee transfer or a direct rollover check payable to another qualified account.
Connecticut pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | No on regular payments since January 1, 2025: only if you ask the payer |
| Default rate if you give the payer no form | With no CT-W4P on file, nothing is withheld from periodic payments. If you ask, you choose a withholding code (A through F) by filing status and expected income |
| Lump sum or one-time payment | A lump sum (a distribution above $5,000 or more than 50% of the account balance, whichever is less) is withheld at 6.99% absent a CT-W4P, unless it was previously subject to tax (such as a Roth 401(k) or Roth IRA distribution), is a trustee-to-trustee transfer, or is a direct rollover check payable to another qualified account |
| Form to start, change or stop it | Form CT-W4P, given to the payer (not to the Department of Revenue Services) |
| Changed for 2026? | The change to non-mandatory withholding took effect January 1, 2025; no 2026 change stated in the 2025 form read |
What the Connecticut documents say
Connecticut used to require payers to withhold from these payments. The Department of Revenue Services form now says that payers are no longer required to withhold from certain pension and annuity distributions, and that with no CT-W4P on file for a periodic payment, “no amount shall be withheld”.
Lump sums are different. The form says “Payers are still required to withhold income tax from lump sum distributions”. It defines a lump sum as a distribution greater than $5,000 or more than 50% of the entire account balance, whichever is less, and sets the rate at 6.99% absent a CT-W4P, except where any portion was previously subject to tax (such as a Roth 401(k) or Roth IRA distribution) or the distribution is a trustee-to-trustee transfer or a direct rollover check payable to another qualified account. Code E on line 1 gives zero withholding.
To start, change or stop withholding you give the completed form to the payer; the form says: “Submit completed form to the payer of your pension or annuity”. It also says that “Form CT-W4P will remain in effect until you submit a new one”.
What the printed rate means in dollars
For a $50,000 lump sum with no Form CT-W4P on file: 6.99% of $50,000 is $3,495 (computed as $50,000 times 6.99%).
These are illustrations of the rate the state document prints, not a prediction of how your payer will calculate or what you will owe at filing.
What a mover should know
This page is about Connecticut 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, state tax withholding on IRA and 401(k) withdrawals in Connecticut covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The Form CT-W4P read is the 2025 edition, so a 2026 change cannot be ruled out from the documents read.
- The instruction for on-demand nonperiodic payments (6.99% if neither code E option is marked) does not match the payer instruction for non-lump-sum payments (no withholding). Ask the payer how it treats a one-time payment that is not a lump sum.
Common mistakes
- Assuming the payer is withholding for the state because it withholds for the IRS: in a voluntary state nothing is withheld until you give the payer the state’s form.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state tax withholding on IRA and 401(k) withdrawals in Connecticut, Connecticut retirement taxes, whether Connecticut taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- Form CT-W4P, Withholding Certificate for Pension or Annuity Payments (Rev. 12/24), with instructions: https://osc.ct.gov/wp-content/uploads/2023/08/CT-W4P_2025.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 16, 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.