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Get your taxes done using TurboTax
You have several good questions and we will attempt to answer them:
1. Your employer is required to withhold state (and in some cases, local) income taxes. When you file your annual return in your new state, that state will contact your employer to find out why they didn't withhold any taxes. If you are retiring (after reaching age 62) the underpayment was due to reasonable cause and not willful neglect, the law allows the IRS to waive the penalty. You should try to estimate your current tax bracket on you new income level. You can try to do an estimated tax return based on the income you expect this year. If the tax works out as an overall tax rate of 15%, you should have state pension withhold 15%.
2. The loss on tax deferred retirement plans shows up in the amount you are eligible to withdraw or rollover to another plan. As it is a smaller amount, any taxes will be less. You do not report any capital losses.
3. It is a good time to convert retirement funds to a Roth when the assets are worth less, such as now when the stock market is down. You will also would like to do it when you are in a lower tax bracket. You may wish to speak to a financial planner on how to optimize moving to a Roth at this time.
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