Pension and Deferred Compensation Issues
After you retire, you may decide to move to a state with lower tax rates or no state income tax. Generally, Federal law prohibits states from taxing nonresidents on most retirement plan distributions. The law applies to amounts received from most employer-provided retirement plans and IRAs.
Sale of Your Principal Residence or Investment Property
If you move to a new state and keep a home in your old state, you have a few issues to deal with.
There are a lot of things you can do to help establish your residency in the new state. If this is your goal, or if you have moved and have questions about selling your home, call your tax professional.
Changing Your Locale
The section The Role of Your Home in Retirement examines the pros and cons of trading down your residence. Maybe you'd like a change of climate or locale as well. You may also opt for a different living arrangement. Besides living in a single family home in the general community, you may want to consider adult or retirement communities, condominiums and town houses, or possibly a mobile home, giving you the opportunity to explore the country and live in different locales at different times of year.
IMPORTANT NOTE: Never move to a new locale until you have checked it out thoroughly. You may be making a big investment and may be spending the rest of your life in this chosen location.
Tips on Choosing a New Locale
SUGGESTION: Health care will be an important concern. Look for excellent hospitals, easy availability of health care, and good doctor to patient ratios. Also, see if the area you may move to has an HMO, if that is your health care preference.
If it is your goal, establish legal residency in the new location. This will have a bearing on how you are taxed for both income and inheritance taxes. There are many things you can do to help establish your legal residency in the new state. Call your tax professional.