Timothy Sumer

While there are numerous benefits to moving to a no income tax state, there are also dozens of considerations. Today, we’ll discuss the backdoor Roth IRA tax savings from relocating to an income tax-free state. Back-door kind of has some negative connotations. While it can sound shady, it is completely legal when correctly executed, and can be one of the more effective strategies for high-net-worth individuals when saving for retirement. Here’s how it works: you contribute to a traditional IRA, even though you may be phased out of the deduction, then you convert the monies over to a Roth IRA. Since you are living in a state with no income tax, you wouldn’t have to pay taxes on this conversion, leading to bigger tax savings than one that would tax you. Be mindful of when, and how you go about implementing a backdoor Roth IRA, such as: - Will my tax rate be lower or higher in the future? - Will our country’s tax rates be lower or higher? - When do I plan on withdrawing t...