Updated October 16, 2026. Quick answer: Only if you ask. For a regular annuity or retirement distribution, Maryland law has the payer withhold the amount the payee requests; the request form says “The amount must not be less than $5 a month”. A resident’s eligible rollover distribution that is subject to mandatory federal withholding is the exception: the statute has the payer withhold 7.75% of the payment.
Maryland pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | No on regular payments: only the amount you request |
| Default rate if you give the payer no form | No default. You enter a whole-dollar amount per payment, at least $5 a month |
| Lump sum or one-time payment | An eligible rollover distribution paid to a resident that is subject to mandatory federal withholding is withheld at 7.75% of the payment (Tax-General 10-908(f)) |
| Form to start, change or stop it | Form MW507P, given to the payer (not mailed to the Revenue Administration Division) |
| Changed for 2026? | No change stated; the form read is the May 2023 edition |
What the Maryland documents say
Under Maryland’s Tax-General 10-908, withholding from an annuity or retirement distribution is the amount the payee requests. Form MW507P is the request. The form says the annuity must be payable over a period longer than one year.
The amount must not be less than $5 a month for annuities and retirement distributions. You end the request at any time by giving the payer a written termination notice, and the form says the request “will remain in effect until you terminate it”.
The statute treats a resident’s eligible rollover distribution that is subject to mandatory federal withholding differently: it provides “an amount equal to 7.75% of the payment”.
What the printed rate means in dollars
For a $50,000 eligible rollover distribution subject to mandatory federal withholding: 7.75% of $50,000 is $3,875 (computed as $50,000 times 7.75%).
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 Maryland 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 Maryland covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The documents read publish no default rate for a periodic annuity. The Form MW507P read is the 05/23 edition and describes no 2026 change.
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 Maryland, Maryland retirement taxes, whether Maryland taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- Form MW507P Maryland Income Tax Withholding Form for Annuity, Sick Pay and Retirement Distributions (05/23): https://www.marylandtaxes.gov/forms/24-forms/mw507P.pdf
- Maryland Code, Tax-General section 10-908: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-908
- 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.