Updated October 7, 2026. Quick answer: Only if you take the whole account at once. The D.C. Code requires District income tax to be withheld when a resident takes a payment from a retirement plan or account “that is a lump-sum distribution”, at the highest District rate in effect at the time, and the Office of Tax and Revenue says “The requirement to withhold is now limited to lump-sum distributions”.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Washington, DC tax withholding on pension payments.
Washington, DC withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | Only on a lump-sum distribution to a resident payee; withholding on periodic and non lump-sum payments was repealed |
| Rate or amount | The highest District individual income tax rate in effect at the time of distribution |
| How to start or stop it | Not stated in the documents read |
| Direct rollover | Not required for an eligible rollover distribution made as a direct trustee-to-trustee transfer, or an IRA-to-IRA direct trustee-to-trustee rollover |
| Changed for 2026? | No change stated; the notice read dates from 2012 |
What the Washington, DC documents say
The rule is in D.C. Code section 47-1812.08. A resident payee who receives a payment from a retirement plan or retirement account “that is a lump-sum distribution” has District income tax withheld by the payor at the highest District individual income tax rate in effect at the time of the distribution. A portion that was previously subject to tax is not withheld on again.
The Office of Tax and Revenue’s notice, Revised Withholding Requirements on Distributions from Retirement Plans, says the earlier requirement to withhold from periodic and non lump-sum payments has been repealed, and that “The requirement to withhold is now limited to lump-sum distributions”. The notice is from 2012 and quotes a top rate of that year, which this page does not repeat as the current rate.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 withdrawal that is only part of the account. It is not a lump-sum distribution, so the District rule does not require withholding on it. Federal tax is separate: 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 if it is a 401(k) payment to you. If $50,000 is the whole account, it is a lump sum, and District tax is withheld at the highest District rate in effect then. The documents read give no current rate, so this page states no dollar figure for it.
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 statute carves out the same case: withholding does not apply to “eligible rollover distribution that is effected as a direct trustee-to-trustee transfer”, or to a direct trustee-to-trustee rollover from one IRA to another.
What a mover should know
This page is about Washington, DC 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 statute’s current top rate is not in the documents read, and the only percentage the notice gives is from 2012, so no rate is stated. The documents read name no form for asking a payer to withhold or to skip withholding.
Common mistakes
- Expecting District withholding on every IRA or 401(k) withdrawal; the rule reaches lump-sum distributions only.
- Treating a partial withdrawal as a lump sum; the statute defines the term by the payee’s entire account.
- 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 Washington, DC taxes 401(k) and IRA withdrawals, Washington, DC retirement taxes, and retirement withholding calculator.
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Answer againSources
- D.C. Code 47-1812.08, Withholding of tax: https://code.dccouncil.gov/us/dc/council/code/sections/47-1812.08
- Revised Withholding Requirements on Distributions from Retirement Plans or Accounts, OTR Tax Notice 2012-02 (with superseded OTR Notice 2011-9): https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/release_content/attachments/WH%20Retirement%20Plan%20Distribution%20Revision_0.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.