Updated October 7, 2026. Quick answer: Not on an IRA, but yes on a 401(k) payment with federal withholding. The Department of Taxation’s guide lists “Payments made from an IRA or SEP” among payments exempt from Virginia withholding, while Virginia withholding “is generally required on any payment for which” federal withholding is required.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Virginia tax withholding on pension payments.
Virginia withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | Generally on any payment for which federal withholding is required, unless the payee files Form VA-4P claiming no withholding; payments made from an IRA or SEP are exempt |
| Rate or amount | 4% when the payment is subject to mandatory federal withholding of 20% or 28% or is not made on a regular basis |
| How to start or stop it | Form VA-4P, filed with the payer before payments begin |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the guide read is Rev. 10/26 and Form VA-4P is Rev. 04/26 |
What the Virginia documents say
The Department of Taxation’s Income Tax Withholding Guide for Employers says Virginia law conforms to the federal definition of income subject to withholding, so “Virginia withholding is generally required on any payment for which” federal withholding is required, which includes pensions and annuities. In the list of payments exempt from withholding it includes “Payments made from an IRA or SEP”.
For nonperiodic pension and annuity payments the guide says that if the payment is subject to mandatory federal withholding of 20% or 28%, or payments are not made on a regular basis, the payer withholds “withhold Virginia tax at a rate of 4%”. The payee uses Form VA-4P: the guide says “Form VA-4P should be filed before pension or annuity distributions begin”.
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. Because it is subject to mandatory federal withholding of 20%, Virginia withholds 4%: $2,000 (computed as $50,000 times 4%). A $50,000 IRA withdrawal is the other case: the guide lists payments made from an IRA as exempt from Virginia withholding, so the Virginia 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”. The Virginia 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 Virginia 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 Virginia withholding, and they describe no change for 2026. The 4% is the guide’s rate for nonperiodic pension and annuity payments.
Common mistakes
- Expecting Virginia to withhold on an IRA withdrawal; the guide lists payments made from an IRA as exempt.
- Waiting until after payments begin to file Form VA-4P; the form says to file it before they begin.
- 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 Virginia taxes 401(k) and IRA withdrawals, Virginia retirement taxes, and retirement withholding calculator.
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Answer againSources
- Income Tax Withholding Guide for Employers: https://www.tax.virginia.gov/sites/default/files/vatax-pdf/employer-withholding-instructions.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.