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I am wondering if some scheme like "Married filing separately" for one year might allow a legal way for me to roll over my 403b to a Roth IRA without getting killed on state and federal taxes. After all, my income is $0.

That doesn't work for you. California is a community property state. So half of your wife's income is yours on a MFS return. And 1/2 of your Roth conversion would be hers.

If you want to do your own investing, you could move the 403(b) money into a traditional IRA and invest there.

Given your wife's income and state of residence, you're almost certainly paying AMT. That means you've effectively got a flat Federal tax rate of 28%. And CA's tax 9.3%, unless you've got other income pushing you over $500k of income. So you can probably plan on paying those rates if you were to convert to a Roth now.

You've got 25 years until retirement. That's a long time to go without having any break in income. I'd stick it out as-is for now. Unless your wife is a tenured teacher, there's a reasonable chance she will have some break in her employment over the next 2 decades. That would be the time to do the conversion to Roth - in a year when your income is unusually low.

Another strategy would be to convert smaller amounts each year, spreading the tax bite out over multiple years and hopefully paying it out of current cash flow instead of having to dip into the 403(b)/IRA money to pay the taxes.

If your plan is to move to another state after retirement, the CA tax savings might be enough on their own to delay any Roth conversion until you have moved. A conversion after you establish residency in another state would not be taxable to California.

Just some things to chew on.

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