Financial Question Regarding Retiring In Oregon (where to stay, 2014, hotels)

[365247]

I’m posting this in the Oregon forum, as this is where I will be investing and retiring. My main concern is with this specific section of #5:

5. Don’t underestimate your home-related expenses
“People look at their accounts and say, ‘I have the money’,” said Hammer. “I will just pull $150,000 out. When you pull that type of lump sum, you need to take out $200,000 when you consider federal and state taxes.”


How will withdrawing the funds from a CD, and a non-custodial IRA come into play regarding Oregon state taxes, and federal as well?

The above excerpt gives a $50,000 figure as the extra amount needed. Given the $150,000 sold price as their example, is that the same sort of percentage that I should use when calculating the amount for my withdrawal?

Many thanks in advance for any help.

http://finance.yahoo.com/news/bigges...100029956.html

[Heidi60]

Maybe this will help:

Personal Income Tax Overview Income

Oregon is NOT tax friendly to retirees.

I would recommend talking with a professional financial advisor as most on line posters simply don't know your complete financial situation and many are not qualified.

[Silverfall]

It depends on what tax bracket you fall into. Most people fall into the 9% income tax rate in Oregon, so if you are ballparking it, I would use that tax rate, plus whatever federal rate you will fall into.

You could always do a consult with a local CPA who can look at your financials and give you some projections as to what your tax liability would look like here. It would be worth the few hundred dollars to a CPA to get a better idea if you can't afford a financial planner.

[Larry Caldwell]

Originally Posted by Heidi60

Maybe this will help:

Personal Income Tax Overview Income

Oregon is NOT tax friendly to retirees.

I would recommend talking with a professional financial advisor as most on line posters simply don't know your complete financial situation and many are not qualified.

Yeah, I have lived in Oregon all my life and have a beautiful paid off home, but am thinking about leaving the state because of the income tax. My 401k is killing me on SS taxes. I need to go someplace I won't lose another 10.5% of it if I roll it into a Roth.

[NoMoreSnowForMe]

Property tax goes up pretty regularly in OR, too. You might actually be better off tax-wise in CA. Move to Del Norte County in CA, and go shop across the border like me :-)

[Larry Caldwell]

Originally Posted by NoMoreSnowForMe

Property tax goes up pretty regularly in OR, too. You might actually be better off tax-wise in CA. Move to Del Norte County in CA, and go shop across the border like me :-)

Property taxes are all local and pretty reasonable in my area. It's a rural logging community and people didn't go crazy with bonded indebtedness like people in cities did. The income tax is a killer, though.

[Nell Plotts]

You don't pay Social Security or Medicare tax on 401k withdrawals, federal or state.

When you withdraw money from your IRA or 401k you must pay Federal income tax on that amount. If you live in a state with an income tax you pay them as well. If you currently live in a state with no income tax and want to use a chunk of your IRA/401k money for something like the down payment on a home then withdraw it before moving to Oregon.

Most taxpayers use software to prepare their Fed tax returns. Buy the state module from yours and run through a couple scenarios. Just for giggles complete a part year return with withdrawal before moving and a full year return. Another option is to download the State forms to see how it impacts you.

I am retired and my OR income tax is modest. Even when I worked it only amounted to 6%. Taxes are complicated, the only way to know is to input your own data and see what happens.

Property taxes, as another poster mentioned, are all local. There is a state law that limits increases similar to the CA prop 13 but not quite as aggressive. Bond measures put to a vote are exempt. Basically for a given level of service government must find revenue, what is important is whether or not taxing agencies are spending YOUR money wisely.

We all complain about our taxes.. even Washingtonians who have no income tax.

[365247]

Truly sorry all, I should have been a little clearer.

Firstly, I have moved from SoCal and have my belongings in storage in Oregon.
I have been in hotels between Oregon and NorCal since...exploring new areas, comparing where to stay, while trying to find a home/area that I like, that's also in my price range. I have definitely decided on Oregon.

Secondly, I probably won't be withdrawing a chunk, I may be cashing in/out the entire IRA and CD for the house, leaving zero balances.

I spent almost equal time between Calif. (previous residency) and Oregon in 2014. I, as well as the tax preparer wasn't sure to which state I was obligated to.
50-50 chance I'd be wrong either choice, so to keep myself out of potential trouble, I offered to file to Oregon, since it has the higher tax rate and would look less devious if wrong.

I'm waiting to have my bank statements and cell phone bill delivered to a street address in Oregon to establish residency. When they arrive in the next few weeks, I can then apply for an Oregon driver license.

I had no idea of the IRA tax penalties involved, nor to consult with an advisor/CPA!
Looks like I'll be comparing financial planner and CPA fees this week and set an appointment, as obviously, finances are not my area of expertise.

Thanks so much to all that replied.

[loveautumn]

Some states tax SS benefits, others don't. California doesn't but as I recall, I think Oregon does so be sure to check with your financial person about that. California does tax most pensions, 401ks, etc. so you should also ask your financial person about that as well.

[Larry Caldwell]

Originally Posted by Nell Plotts

You don't pay Social Security or Medicare tax on 401k withdrawals, federal or state.

When you withdraw money from your IRA or 401k you must pay Federal income tax on that amount. If you live in a state with an income tax you pay them as well. If you currently live in a state with no income tax and want to use a chunk of your IRA/401k money for something like the down payment on a home then withdraw it before moving to Oregon.

Most taxpayers use software to prepare their Fed tax returns. Buy the state module from yours and run through a couple scenarios. Just for giggles complete a part year return with withdrawal before moving and a full year return. Another option is to download the State forms to see how it impacts you.

I am retired and my OR income tax is modest. Even when I worked it only amounted to 6%. Taxes are complicated, the only way to know is to input your own data and see what happens.

Property taxes, as another poster mentioned, are all local. There is a state law that limits increases similar to the CA prop 13 but not quite as aggressive. Bond measures put to a vote are exempt. Basically for a given level of service government must find revenue, what is important is whether or not taxing agencies are spending YOUR money wisely.

We all complain about our taxes.. even Washingtonians who have no income tax.

You pay income tax on SS starting with a joint income of $53,000 and ramping up the more you make. At a maximum, you have to pay income tax on 85% of your SS, in addition to the income tax on the 401k/IRA withdrawals. Thanks to required minimum distributions, you don't have the option of foregoing the retirement account income, so you get stuck with it every year. You can roll the whole thing into a Roth, pay income tax on SS and the money once, then it is tax free for the rest of your life. If you do the rollover in Oregon, you get whacked with another 10.5% state income tax. You can't just leave the state for one year, do the deed and come back, or they will come after you for the money. My mother died last spring, so there is really nothing keeping me here but inertia. It may be time to go. Oregon's tax structure is not good for retirees. Anybody moving to Oregon to retire should eliminate any tax sheltered accounts a year before you move.

As I have pointed out many times, there is no Oregon property tax. All property taxes are local, and vary with where you live.