Rolling Over IRA to Roth From IRA In California Dan Walkow

My_question_is: Applicable-to-other-jurisdiction
question: Hello,
We plan to travel and want few tax related dependencies. Conversion of our traditional IRAs to Roth should take 
care of the Federal aspect. We understand that California may be a thorn in our plans and detailed information
is scarce. Our savings (both traditional IRAs and 401(k)) was earned while we were employed in California.
1. Can we satisfy the California tax obligation during the Roth IRA conversions and if so, how?
2. Can the 401(k), which was rolled to a traditional IRA at the time of distribution, be treated in a similar way?
3. Does the "less than $100,000"? income eligibility for IRA conversion include the IRA balance as income?
Thank you in advance!


david ingram replies:

Up until about 15 years ago, California did try and tax California pensions paid to out of state residents but lost that ability in court a long time ago.  Your pensions or IRA's today are not subject to California Tax IF you are clearly a resident of another state. Traveling through the southern states in a Motorhome registered in Washington state could mean that California could take a swing at you.   For a more detailed answer I referred this question to Gary Gauvin (, my old partner in Ottawa who move to Dallas.

His succinct reply follows.

California generally conforms to federal law in regards to Roth IRAs and conversions. A small exception would be if contributions to the original IRA were made in 1975 or 1976.  I’m not sure the “thorn” you are referring to, but a nonresident of CA is not subject to CA tax on IRA distributions (or any other qualified plan), even if accrued while he resided in CA. It would be taxable in the state of residence. (Sec 17952.5, Rev & Tax Code)

California does have fairly complicated and strict rules on residency, tax home and tax domicile. In general, unless you have residency in another state, you may still be considered a resident of CA for state tax purposes even without being physically in the state for years.

Starting in 2008 Roth conversions can come from any qualified retirement plan, not only IRAs. That includes Rollover IRAs from previous 401(k) plans.

The 100,000 Modified AGI limitation does not include the conversion amount.

 Gary Gauvin
david ingram comments -  I do not see a Canadian Connection here, but few people are qualified or knowledgeable about cross border investing and even fewer are set up with licensing, etc. to look after cross border investing.  Dan Walkow is one person who has made cross border investing his mantra and likely has cross  border clients in over 30 geopolitical areas (different states and provinces) in North America.  You can see more about Dan and Seabank Capital at He is particularly effective with Canadians who have moved to the US and Americans who have moved to Canada   You can also see several cross border interviews i have done with Dan at  He will also be live on Ingram at 7 PM on Wednesday, July 8 and you can ask a question on air at 1-866-980-0499


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