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Bob78164 wrote:

Correct me if I'm wrong, but isn't there another option? As I understand the law, what matters is where you live when you take the distribution, not when you deposit the money into the Roth IRA. So if HardlyRich doesn't plan to live in Massachusetts in retirement, he shouldn't concern himself with Massachusetts tax law, but with the law of his intended state of retirement.

And by the way, there's no reason to restrict lobbying on this issue to the state level. If the federal government chooses to, it can require states to treat qualified Roth withdrawals as tax-exempt. IMHO, it's a better use of Washington's time than obsessing about stains and blue dresses. --Bob

I reply:

Your reply is correct only if you buy and hold your securities until retirement. Since the state of MA does not even recognize the Roth as an IRA, any capital gains or dividen income will be taxed by the state in the year they occur. Thus whenever you sell a security in a Roth at a gain, you'll have to pay state capital gains taxes even though you are not withdrawing the money from the Roth account. Massachusettes treats the Roth just as any normal investment account.

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