Connecticut has temporarily suspended its mandatory withholding requirement for lump sum retirement distributions from July 1, 2025, through December 31, 2026. Under HB 7287, which passed on June 23, withholding on lump sum distributions will be voluntary during this period, consistent with other retirement distributions.
The legislation maintains Connecticut’s existing definition of lump sum distributions as payments exceeding $5,000 or more than 50% of the payee’s account balance, whichever is less. Beginning January 1, 2027, mandatory withholding requirements for lump sum distributions will resume unless modified by future legislation. Payees may continue to request voluntary withholding on any retirement distribution by completing Form CT-W-4P.
To review HB 7287 in greater detail, click here.
To review Connecticut Employer’s Tax Guide, click here.
To review Form CT-W4P, click here.
