TL; Dr -- strategy to deal with IRA distro taxes if move from IL having no taxes to NC having a 5.75% flat tax -- would very much appreciate any input
(Aside comment to avoid other state tangents: We realize we could move to other more tax advantage states like TN and be near the hills (App Mtns) but the Western NC seems to have much nicer communities, activities, medical, etc, options. I've visited 3 times (neighbor and son) and DW and I have visited once. Let's assume a NC move vs another state).
I am retired but wife will work a few more years while the youngest is in college and because they both have health issues so a little more time on her company health plan will be very beneficial.
Overview:
a) We currently live in IL that does not have any taxes on IRA distributions.
b) After we are both retired we are looking to move to Western NC which has a 5.75% flat state tax on IRA distributions.
c) We have 1/6th of our money in ROTH IRA 5498 Contrib which we can take out without any taxes/penalties(aftertax money in 401Ks moved to ROTHs and other ROTH IRA conversions). I verified all this showing a CPA all our 1099-Rs a few months ago.
We are trying to determine if there is a good strategy to move some money out of our ROTH IRA 5498 Contrib while we are still in IL and there are no state taxes for IRA distributions.
1) The only thought I had so far was to take out some (all?) of this ROTH money and invest it in NC bonds that are state and federal free of taxes. This would be large part of my bond part of my asset allocation.
This very old company Dupree (Fund Info / About Us) has long term and short term funds for NC. No Front or Deferred load. No Management fee. Expense ratio 0.70%. 2%-3% yield.
Long term NTFIX: NTFIX Dupree NC Tax-Free Income Fund NTFIX Quote Price News
Short/Med term NTSMX: NTSMX Dupree NC Tax-Free Short-to-Medium Fund NTSMX Quote Price News
I realized the earnings are modest (2%-3%) but this would be part of our bond asset allocation pie chart and compared to 5.75% state taxes it looks pretty good. There FAQ does bring up the point of tax equivalent yield (see 6 here - Frequently Asked Questions)
2) Any other thoughts besides tax exempt bonds? Could be a discussion on the non-bond parts of our asset allocation (stocks, etc)
(Aside comment to avoid other state tangents: We realize we could move to other more tax advantage states like TN and be near the hills (App Mtns) but the Western NC seems to have much nicer communities, activities, medical, etc, options. I've visited 3 times (neighbor and son) and DW and I have visited once. Let's assume a NC move vs another state).
I am retired but wife will work a few more years while the youngest is in college and because they both have health issues so a little more time on her company health plan will be very beneficial.
Overview:
a) We currently live in IL that does not have any taxes on IRA distributions.
b) After we are both retired we are looking to move to Western NC which has a 5.75% flat state tax on IRA distributions.
c) We have 1/6th of our money in ROTH IRA 5498 Contrib which we can take out without any taxes/penalties(aftertax money in 401Ks moved to ROTHs and other ROTH IRA conversions). I verified all this showing a CPA all our 1099-Rs a few months ago.
We are trying to determine if there is a good strategy to move some money out of our ROTH IRA 5498 Contrib while we are still in IL and there are no state taxes for IRA distributions.
1) The only thought I had so far was to take out some (all?) of this ROTH money and invest it in NC bonds that are state and federal free of taxes. This would be large part of my bond part of my asset allocation.
This very old company Dupree (Fund Info / About Us) has long term and short term funds for NC. No Front or Deferred load. No Management fee. Expense ratio 0.70%. 2%-3% yield.
Long term NTFIX: NTFIX Dupree NC Tax-Free Income Fund NTFIX Quote Price News
Short/Med term NTSMX: NTSMX Dupree NC Tax-Free Short-to-Medium Fund NTSMX Quote Price News
I realized the earnings are modest (2%-3%) but this would be part of our bond asset allocation pie chart and compared to 5.75% state taxes it looks pretty good. There FAQ does bring up the point of tax equivalent yield (see 6 here - Frequently Asked Questions)
2) Any other thoughts besides tax exempt bonds? Could be a discussion on the non-bond parts of our asset allocation (stocks, etc)