Are state taxes also deferred in a 401k plan? If so, can I avoid paying state taxes by moving tax free state?

Question

For instance, when I retire can I avoid paying state taxes on my 401k distributions by moving to Florida, which does not have state taxes.

Answer 1

Yes. You contributions to 401(k) are pre-tax, so you are not deferring state taxes, you are paying out of pre-tax income.

If you move to Florida (or in my case Washington), you pay taxes in the state you reside in when you start withdrawing from your 401(k) at your retirement age.

Note that if you withdraw earlier you will pay a 10% penalty

Answer 2

a million. you will ought to tutor to California which you certainly moved in the past making the money. Getting paid isn't the factors here. California will hunt you down and attempt to make you pay if the 1099-Misc or W-2 exhibits a California address. 2. merely because of the fact those states don't have an earnings tax does not cause them to tax loose. maximum could have extensive belongings taxes and extreme sales tax with a view to convey interior the money. while you're self-employed, you additionally can owe a franchise tax to the state.

Answer 3

Yes, 401 K contributions are exempt from state income taxes is most states. There are several States that don't have a state income tax and then there is Penna. which I know does not exempt pension contributions from the annual state tax.
I do also know that Penna. does not tax retirement distributions after you start taking distributions