Snowbird Alert

Thinking about retiring to Florida?  Now may be the right time.

 

With many Cincinnati-based companies trading at 5-year lows, now could be a good time to look at Florida residency.  Here’s why...

It used to be that many corporate executives would work for 30 years in Cincinnati, retire to Florida, and in doing so, be able to avoid paying the dreaded Ohio state tax on their retirement plans and stock options. It was a huge planning opportunity, which could often save them several hundred thousand dollars in state taxes.

About 10 years ago, Ohio decided to rewrite the rules. They argued that if you earned your stock option in Ohio, then you should pay Ohio tax on the option. They then would calculate the Ohio tax due as the difference between the grant price of the stock option and the fair market value on the day you left Ohio.

So as an example, let’s say John Doe worked for P&G in Cincinnati for 30 years and then moved to Florida on January 1, 2018. Based on the stock price when he left, he would have “locked in” a stock price of $92. This means his next set of options due February 2019 would have Ohio tax due based on the difference of his $48 grant price and $92 (the price when he left Ohio), or $44.

Since January, P&G’s stock price has dropped to the low 70’s. Meaning if John Doe had decided to wait and move at the end of May, he could have locked in a price around $74. So, the state tax due on that same 2019 option would be the difference of his $48 grant price and $74, or $18.

In this case, the difference between January 1 and May 31 would save John Doe $26 in taxable income or almost $1.30 per each share in state taxes. Assuming he has a grant of 15,000 shares, this saves him almost $20,000 – just for this stock option! Imagine the impact it could have over his other 150,000 option shares…

So, if you have employer stock options and are seriously looking at retiring in Florida, you should run the numbers and see if this could make sense for you. Lenox is always happy to take a look and provide a second opinion.

 

At Lenox, we work closely with people of all ages to help guide you in every aspect of your financial life –– from wealth creation, wealth building and wealth management, to career planning and coaching, funds for education, retirement planning, working through financial hurdles, and more.  In every instance, we start with you, not your portfolio to help you FUND A LIFE YOU LOVE™.

 

If you’re ready to discuss financial, business, career and life planning that will allow you to Fund a Life You Love®, we’d love to tell you more.  Let’s talk.  It’s your tomorrow. Call us for a complimentary 1-hour review.  Call 513.618.7080 or visit www.lenoxwealth.com to Fund a Life You Love.

 

Past Performance is not indicative of future results.

 

This blog is limited to the dissemination of general information pertaining to its investment advisory/management services. This is not intended to be personalized investment advice. Please contact a Lenox adviser if you would like additional information.