Updated October 7, 2026. Quick answer: No. The Department of Revenue says South Dakota is one of “seven states that does not impose a state income tax”, so there is no South Dakota income tax withholding on an IRA or 401(k) withdrawal.
South Dakota withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No. The Department of Revenue says the state does not impose an income tax |
| Rate or amount | No rate: no state income tax |
| How to start or stop it | Nothing to file: the page read names no South Dakota withholding form |
| Direct rollover | The page read is silent on it; with no South Dakota income tax described, there is no South Dakota withholding to avoid |
| Changed for 2026? | No change stated; the page read is undated |
What the South Dakota documents say
The Department of Revenue’s individual taxes page, under income tax, says South Dakota is one of “seven states that does not impose a state income tax”.
The page directs questions about a federal return to the Internal Revenue Service. It names no South Dakota withholding form for retirement withdrawals.
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. South Dakota imposes no state income tax, so nothing is held back for South Dakota: the South Dakota amount withheld is $0.
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”. A direct rollover therefore has no South Dakota withholding to avoid.
What the documents do not say
- The page read is a single undated Department of Revenue page. It cites no statute and says nothing on withholding mechanics, rollovers or any change for 2026.
Common mistakes
- Looking for a South Dakota form to opt out of withholding; there is no state income tax to opt out of.
- Taking the page’s mention of federal questions as a South Dakota rule; it points readers to the IRS.
Related: how South Dakota taxes 401(k) and IRA withdrawals, South Dakota retirement taxes, retirement withholding calculator, and retirement taxes by state.
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Answer againSources
- Individuals: Taxes (Income Tax section): https://dor.sd.gov/individuals/taxes/
- 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.