What the "Florida Flip" is
The idea is simple: relocate from a high-tax state to Florida, establish residency, and then convert pre-tax IRA or 401(k) dollars to a Roth IRA. Because Florida has no state income tax, the conversion is taxed only federally — where the same conversion in your former state might have added 5–13% in state tax.
Why Florida changes the math
A Roth conversion is taxed as ordinary income in the year you do it. In a high-tax state, that means state tax on top of federal. In Florida, the state layer disappears. Over a multi-year conversion plan on a large pre-tax balance, that difference can be substantial. The catch: you must genuinely establish Florida residency and domicile first — and be mindful that some former states scrutinize part-year and recent-mover conversions.
Roth conversion basics
You move money from a pre-tax account to a Roth, pay ordinary income tax now, and the funds then grow tax-free and come out tax-free in retirement. Roth IRAs also have no lifetime required minimum distributions for the original owner — so converting shrinks the pre-tax balance that would otherwise drive large taxable RMDs later.
Timing — the "gap years" opportunity
The sweet spot is often the window between retiring and the start of RMDs (age 73 or 75 under SECURE 2.0). In those years your taxable income may dip, opening room to convert and "fill up" the lower tax brackets deliberately — converting at, say, the 12% or 22% rate rather than being forced to withdraw at higher rates once RMDs begin.
Watch IRMAA — the hidden cost
Here's the trap. A conversion raises your modified adjusted gross income, and Medicare uses your MAGI from two years prior to set your Part B and Part D premiums (IRMAA). Convert too much in one year and you can trip into a higher IRMAA tier — a surcharge that shows up two years later. The fix is to size each year's conversion to stay under the relevant IRMAA and bracket thresholds.
Other trade-offs
- Pay the conversion tax from outside funds, not the IRA, to keep the full balance growing tax-free.
- Watch the 3.8% net investment income tax and capital-gains stacking.
- Consider legacy benefits — heirs inherit Roth dollars tax-free.
A multi-year conversion plan
The Florida Flip is rarely a one-year move. We map conversions across your gap years, filling lower brackets while staying under IRMAA thresholds, and coordinate with your broader retirement plan. Because conversions can't be undone, the modeling matters — and we do it alongside your CPA.
Disclosure: Skyview Financial Group, LLC is an SEC-registered investment adviser (CRD #310581). This content is educational only and is not individualized tax, legal, or investment advice. Figures and rules cited are current as of August 2026 and subject to change; please consult your CPA and, where applicable, legal counsel. Examples are illustrative and do not reflect any specific client.