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Greetings, HardlyRich, and welcome. You asked:

I am new to this board and haven't seen any posts on this subject so I'll ask now.

I live in a Massachusettes which has a state income tax. From what I have been able to discern from the state law at URL:

...Massachusettes does not appear to even recognize the Roth as an IRA. Thus any gains or dividens earned are taxable at the state level in the year they occur (just as if its a regular investment account).

Under this condition, would it still be wise to convert my Rollover IRA to a Roth if the only tax benefits are at the Federal level and I must pay all state taxes as they occur?

Also, I had opened a Roth IRA in the beginning of the year and contributed my $2000. Should I continue with this account, making yearly contributions of $2000 even though the state will treat the account as any regular investment account.

Are other states recognizing Roth IRAs?

If my interpretation of Massachusettes law is incorrect then let me know.

There are some 19 states that do not conform to federal law with regard to taxation of the Roth IRA. Massachusetts is one of these states. Most of the 19 non-confirming states are expected to pass legislation adopting the federal position on taxation, but I don't know if MA is one of them. You'll have to check with your state legislature on that.

You'll also have to examine your own tax situation to see if a conversion and/or contributory Roth IRA makes sense in your case. Obviously, it certainly isn't as an attractive option as it is for someone who can avoid both federal and state income taxes.

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