Updated October 7, 2026. Quick answer: Yes, 6.25% by default. The Department of Revenue says Minnesota “requires withholding on annuity and pension payments unless the recipient asks” the payer not to, and with no Form W-4MNP on file the payer withholds “at a rate equal to 6.25% of the taxable payment or distribution”.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Minnesota tax withholding on pension payments.
Minnesota withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | Yes for payments to Minnesota residents unless the recipient asks the payer not to withhold |
| Rate or amount | 6.25% of the taxable payment or distribution with no valid Form W-4MNP; you may choose any percentage or dollar amount, or none |
| How to start or stop it | Form W-4MNP, given to the payer; check No withholding, or set another percentage or amount, separately for periodic payments and nonperiodic distributions |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | Yes: the 2026 Form W-4MNP is a revised form; payers need not use it before January 1, 2026 |
What the Minnesota documents say
The Department of Revenue’s page on withholding for annuities and pensions says that, beginning with payments made on or after January 1, 2022, Minnesota “requires withholding on annuity and pension payments unless the recipient asks” the payer not to withhold. Recipients use Form W-4MNP to set the rate or amount or to opt out. The withholding booklet traces the rule to Minnesota Statute 290.92, subdivision 20.
On the form, the default is that with no form on file the payer withholds “at a rate equal to 6.25% of the taxable payment or distribution”. To skip it, the form says to “Check the “No withholding” box and sign Form W-4MNP to validate it”. The 2026 revision is the new version: “not required to use this revised Form W-4MNP before January 1, 2026”.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 401(k) withdrawal paid to you with no W-4MNP 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. Minnesota withholding at the 6.25% default is $3,125 (computed as $50,000 times 6.25%). With a W-4MNP you could set a different percentage, a dollar amount, or none.
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 Minnesota 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 Minnesota 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 documents read do not say how a direct rollover is treated for Minnesota withholding.
Common mistakes
- Choosing No withholding without planning for the tax; the form advises considering estimated tax payments to avoid penalties and interest.
- Using the old Form W-4MNP after the payer switches to the revised one; the 2026 version is a revision.
- 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 Minnesota taxes 401(k) and IRA withdrawals, Minnesota retirement taxes, and retirement withholding calculator.
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Answer againSources
- Withholding for Annuities and Pensions: https://www.revenue.state.mn.us/mndor-pp/1456?type=html
- 2026 W-4MNP, Minnesota Withholding Certificate for Retirement Account, Pension, or Commercial Annuity Payments: https://www.revenue.state.mn.us/sites/default/files/2025-12/w-4mnp.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.