Why New Jersey Retirees Headed for Florida Delay Roth Conversions Until After the Move

For many New Jersey retirees relocating to Florida, even a one-day difference in when they complete a Roth conversion can determine whether they owe tax to a state they are leaving behind.

IRS migration data for the 2022-2023 period show that New Jersey sent 20,113 tax returns covering 34,761 people to Florida. Those households reported $2,957,951,000 in adjusted gross income. For anyone in that group with a traditional IRA, the timing of a Roth conversion can be just as important as the amount converted.

Where You Live on Conversion Day Determines the State Tax

A Roth conversion is treated as income. Under 26 U.S.C. § 408A(d)(3)(A)(i), the converted amount is included in gross income to the extent it would have been taxable as a regular distribution. IRS Publication 590-A says such amounts are “normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA.”

State tax on the conversion generally turns on your residency when the conversion occurs. If you convert while still a New Jersey resident, New Jersey generally can tax that income. If you wait until Florida is your legal residence, the outcome changes. Florida’s Income Tax Code defines a “taxpayer” as “any corporation subject to the tax imposed by this code” (Fla. Stat. § 220.03(1)(z)), and the Florida Department of Revenue describes chapter 220 as the state’s corporate income tax.

The federal tax treatment does not change based on where you live. Newark and Naples use the same brackets.

An Example Couple Shows the Difference

Example household: A married couple filing jointly, both retired, plans to convert $100,000. Their other income is $110,000.

1. Income after the conversion: $110,000 plus $100,000 equals $210,000.
2. Next, subtract the 2026 standard deduction of $32,200 for joint filers. To keep the example simple, this leaves out age-based deductions. $210,000 minus $32,200 equals $177,800 of taxable income.
3. In 2026, the 22% rate applies to joint taxable income above $100,800, and 24% starts above $211,400. That means the conversion stays within the 22% bracket.
4. The couple’s $210,000 of income also stays below the $218,000 joint threshold where the 2026 Medicare Part B surcharge, or IRMAA, begins.

Those calculations are the same whether the couple lives in New Jersey or Florida. The only change is the state tax. If the conversion happens while they are still New Jersey residents, New Jersey will tax the $100,000 amount at its own rate, so the exact figure should be checked with state guidance or a tax professional. Once they are Florida domiciliaries, the same conversion is not subject to Florida individual income tax.

The Year of the Move Is Usually Split Between Two States

In the year you relocate, you typically file as a part-year resident in each state. Income is generally assigned to the state where you lived when you received it. A conversion made before the move usually falls on the New Jersey side of that split, while the same conversion after the move is generally not taxed there. That is why many people wait until the moving truck has left and the paperwork is complete.

Changing Legal Residence Requires More Than a Florida Address

Renting a condo in Florida does not, by itself, make Florida your legal residence. States look for proof that you have truly ended your old ties and established a new home:

• Driver’s license and car registration: switch them to Florida as soon as possible.
• Voter registration: register in your new county and cancel your New Jersey registration.
• Homestead: Florida grants the homestead exemption to a person who, on January 1, holds title to the property and “in good faith makes the property his or her permanent residence” (Fla. Stat. § 196.031(1)(a)).
• Time: keep records showing where you actually spend your days, along with where your doctors, bank accounts and memberships are located.

New Jersey May Still Question the Move

Former residents can be challenged if the state believes they never truly left. The risk is stronger if you keep a New Jersey home, spend long stretches there, or make a large conversion soon after relocating. Selling or renting the old home and shifting your daily life south helps support the Florida claim. Keep supporting documents until the period for reviewing your returns has passed.

Federal Conversion Rules Still Apply

• Take required distributions first: you cannot convert amounts that must be distributed for the year, including the calendar year in which you reach age 73.
• No do-overs: under 26 U.S.C. § 408A(d)(6)(B)(iii), a conversion cannot be recharacterized, so an unwanted conversion cannot be undone.
• How the money moves: you can convert through a 60-day rollover, a trustee-to-trustee transfer, or a transfer within the same trustee (26 CFR 1.408A-4(b)).
• Reporting: conversions are reported on Form 8606, and you may need to increase withholding or make estimated tax payments.

Who Should Avoid This Approach

Delaying the conversion often works best for people who have a firm moving date, cash outside the IRA to cover the federal tax, and room left in their current bracket. It is a poor fit in these situations:

• You intend to keep strong New Jersey ties, which could trigger a residency dispute.
• You will need the IRA funds soon.
• A larger conversion would push joint income above $218,000. In 2026, that would raise the monthly Part B premium from $202.90 to $284.10, and add a $14.50 Part D surcharge.
• You expect your heirs to be in lower tax brackets, making it cheaper to leave them pre-tax money.

Medicare surcharge amounts beyond 2026 have not yet been set. If you are planning a conversion after the move, check the updated figures before deciding how much to convert.