State taxes on Roth IRA conversion spead over two years?
I am retired and live in a state (Oregon) that has state income taxes. I converted a large part of my IRA to a Roth IRA in 2010. If I move to a state this year that does not have state income taxes (Washington State) and spread the taxes over 2011 and 2012, would Oregon require me to pay taxes on the entire amount even though I would not be a resident of Oregon in 2012?
Thank you. OH Griffith
Permalink Submitted by Alan Spross on Sun, 2011-02-20 04:39
I don’t believe they will, but you need to verify this with the Oregon DOR. You would have to have no domicile OR, and if you established sole domicile elsewhere this year, OR would probably pro rate the conversion income by the # of days before leaving the state. This is basically the approach taken by CA and is based on the 1996 elimination of the source tax. Following is copied from the OR tax booklet:
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Nonresidents. Oregon does not tax your retirement
income if you are a nonresident who is not domiciled
in Oregon. If you are an Oregon nonresident who is
still domiciled in Oregon, any Oregon-source retirement
income is taxable by Oregon. This applies to
most forms of retirement income taxed by Oregon, etc …….(includes IRA distributions.)
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Could find no specific reference to 2010 conversions, so the above general rule appears to apply. Again, verify this prior to acting on this post.
Permalink Submitted by O Hayes Griffith on Mon, 2011-02-28 01:54
Dear Alan,
Thank you. As usual, your advice is very useful. I will follow up on this before taking any action.