Retiring and moving to a different state

[mikemarq]

My wife and I plan to retire next year and move from Ohio to South Carolina.   We will be 59 years old.  Let's say we move June 30 and are therefore evenly domiciled between the two states.

My question is, how would a 401k distribution be taxed at the state level?

If we take a $120k distribution while still living in Ohio (this would be our only distribution for the year) - would we pay OH tax on all of it and no tax to SC?  Thanks!

[xmasbaby0]

"next year"    --- so you plan to retire and move in 2022?    "We will be 59 years old"   Will you be 59 1/2 when you take that money out of the 401K?   If not, you will pay a federal early withdrawal penalty of 10% plus ordinary income tax--so be careful.

[mikemarq]

yes, 2022, will not be 59.5 - but no penalty applies for taking withdrawal from the 401k plan held at the job one retires from (or leaves for any reason) after 55...   thanks..

[TomD8 · Accepted solution]

Retirement income is taxed by your legal state of residence at the time you receive it.

So if you take the entire distribution while you are still a resident of OH, it is 100% taxable by OH and not taxable by SC.