@msf
Thank you for your time and observations.
This whole pension tax process (May 2011 - Jan. 2012) was a 3 ring, government circus event, to the max; including the last minute rush to provide legal language to the CPA's, etc. Michigan's newly elected governor is a Democrat, while the legislature is Republican for the most part. Removal of the "pension" tax were campaign words by some, but state revenue is state revenue and I doubt this action will take place. The legislators that were in place in 2011 are now term limited away. The political parties remain split on many items, not unlike at the national level. Though Michigan's roads/bridges,etc. are in need of major repairs, Republican's at all levels, including the citizens will not agree/find a monetary path for repairs (IMO). When I query to friends/family who I know are strong Republican's about this circumstance, the overwhelming response is a "hell no, we're not paying any more gas or other tax for repairs". When I ask them how often do they plan to replace the aging shingles on their house, if ever; I get a stare and can hear the wheels turning inside their heads.
So, they and everyone else will "pay" (no taxes for road repairs) in the form of new wheels and tires, and repairs to vehicle suspensions.
What a wonderful, divided world in which we live; as common sense gets thrown out of the window of politics.
Have a pleasant remainder.
Catch

@Catch22,
Thanks for the added info. Appears the courts have weighed in on Michigan’s pension tax recently - particularly on which providers (in our case IRA custodians) are required to withhold the tax. Thus far, all my distributions have come out of TRP, so I can’t comment on any other investment manager. As recently as mid-summer the mandatory withholding appeared to be in effect. Would another institution address Michigan’s law in the same manner? Perhaps not. Is this a reason to leave T Rowe Price? No.
I store the same annual letter to TRP on my computer. After updating date, I print and mail it to TRP along with a new W4-P (available on the internet) and a copy of a recent statement each January 1. Preparing all of this takes about 5 minutes (less time than I’ve spent composing this post). While a 55-cent stamp will work, I prefer to add tracking (via priority mail). So my annual cost is $7.35.
The above is overkill. It’s likely the opt-out would continue into the next year without an update. And one could save $6.80 by not using priority mail. To their credit, Price does an excellent job maintaining one’s records. Call with any tax related question and they’re likely to produce the needed documentation. So I’ll forgive what appears now to be their excessive caution on the pension tax withholding issue.
@Crash - These issues aren’t as complicated as they sound. Invest in the vehicle that will allow you maximum after tax return and also allow you the greatest flexibility in managing your assets.

Here's a page related to the Michigan Retirement/Pension page that Hank linked to. It focuses specifically on Withholding Taxes.
At least for Michigan employers, "Every Michigan employer who is required to withhold federal income tax under the Internal Revenue Code must be registered for and withhold Michigan income tax."
This is the concern I was voicing. Direct Roth rollovers from 403(b)s to Roth IRAs are not subject to mandatory federal withholding. But some employer administrators get this wrong and withhold at the state level anyway, viewing the state withholding as mandatory.
With respect to whether employer (public or private) pensions (including defined contribution plans) are subject to taxation based on age in Michigan vs. IRA taxation rules, all I can say is: good luck! That looks like a full employment act for Michigan CPAs.

Hi @hank
Thank you for your added information.
NOTE: this conversation is not fully in line with this post subject,except to the point of current and/or future taxation regarding the tax status of retirement monies, as to how variations exist within state jurisdictions, aside from whatever personal taxable status may exist at the federal level.
A few pieces of info from 2012 regarding the "new pension tax" in Michigan. Hank, the below item 1 is part of what did cause confusion, from wording within the new tax code, with some pertinent wording in bold by me.
--- 1. Payers Subject to the New Withholding Rules, Michigan (note: there was a last minute scramble to provide payers with withholding instructions for the new calendar year 2012, as the Michigan Supreme Court had just ruled on the Constitutional status of taxing pensions for a narrow portion of the population (read, those born between 1946-1952
)
Only those subject to Michigan jurisdiction are required to withhold Michigan income tax under the new rules. Other payers need not withhold, even though the payee resides in Michigan.
The Withholding Guide refers to the pension “administrator” as the person responsible for withholding. If the administrator is registered with Michigan Department of Treasury only for reasons other than withholding, the administrator must register again as a “pension administrator.” It is not entirely clear whether an administrator who administers payments to one person from more than one plan would have to aggregate the payments for withholding purposes. Analogy to federal law would indicate that aggregation is allowed but not required.
Mandatory Use of the MI W-4P
As mentioned above, the State of Michigan's current position is that an administrator must withhold at the prescribed rate unless the participant provides different instructions on a MI W-4P. We understand that a number of payers are disregarding that position and are continuing to use their own version of the W-4P.
Next for item 2, is a short reply to friends and family at the time (2012) asking what the hell is going on with this new pension tax. Do not imply I retain a bias favoring one political party over another. This is not the case. However, at the time; this form of tax legislation was a strange path for a Republican controlled state government. Thus, the words to help identify the pathway of the legislation for those asking the questions of me (as in, who the hell promoted and favored this legislation?).
--- 2.
I had several email exchanges with legislators, including the Lt. Governor and the state Treasurer during the beginning of this process.
The tax came to birth when the Republicans decided to reduce some business taxes.
The overview:
1. Reduce some business taxes and companies will hire more people and/or new companies will move to Michigan.
2. Michigan's budget is required to be balanced.
3. So, if one is reducing business taxes by $1.6 billion dollars, this needs to be offset from some other source.
4. Thus, the tax the pensions came to be as a source to recover the lose revenue to the state.
The legislation was introduced by a Republican, the final passage was supported by enough Republicans, with the exception of a tie vote in the MI senate, with the tie breaking vote being cast by the Lt. Governor and signed by Gov. Snyder.
The legislation was challenged in court as unconstitutional and eventually traveled to the MI Supreme court for a final decision. The court at the time was Republican dominated. The legislation was passed with a 4-3 vote as not violating the constitution.
Summary: many republicans were not in favor of this tax, but enough voted in favor to set up the tie breaking vote by the Lt. Governor and of course, favored by Gov. Snyder.
My main points in email exchanges (my opinions,2011) with legislators from both political parties were:
1. that whatever amounts would be taken away from retirees in tax, would be monies not spent locally to support those businesses.
2. the tax was targeted at a specific group (baby boomers) does violate tax code by age discrimination
3. those voting in favor are targeting their own retired parents and/or grandparents...duh!
4. a number of Michigan residents will indeed retire to a state that does not tax pensions......this has take place to some extent, so the tax money is forever gone from Michigan, as these "snow birds" stay long enough in another state to claim residence in that state as a taxpayer; although they may return to Michigan during the warmer months. (2019 update, this indeed has taken place in larger numbers; so Michigan has lost this tax base from pension monies)
This link takes you to the legislation path:
https://votesmart.org/bill/13363/35098/tax-exemption-and-pension-bill#.XgiijGYyeM_
----------------------------------------------------------------------
Lastly, Hank; wife and I both receive defined pensions from payers not domiciled in Michigan. We have taxes "only" withheld from 1 pension for federal taxes, so as to not "hit" the federal underpayment penalty box at tax time. No Michigan taxes are withheld from either pension. Generally, we pay the remainder of federal and state taxes owed when filing taxes in the next year, without underpayment penalty. As noted in my previous post, Fidelity only asks; for my IRA RMD, as to whether I choose to have any federal or state tax deducted (tell us how much or none).
Take care,
Catch

I own 6 bond funds (words that I never ever expected to hear coming out of my mouth) but all in an Roth IRA to avoid paying taxes on the income generated by them. All have greater than 4% yields, 5 of them twice as much. (FWIW: IOFIX, BIT, PCI, PDI, PFN, PTY). I am not suggesting that you buy any of them, especially the CEF's.
For your "taxable" account might you not fair better by looking at a muni bond fund or something like a dividend growth fund (e.g. VDIGX, but there are many others) where the income might be at least partly qualified and thus possibly sheltered from the tax man? I'm guessing that you 'need' the income in your taxable side and prefer not to draw down your IRA account(s).

Well, actually: I won't live forever. I have thought and thought, and waited and waited to pull the trigger on my T-IRA. Drawing-down the T-IRA just 3k or 4k each year actually gives me a 50-year window of time before it's all converted from tax-sheltered into whatever new taxable accounts I create. Wifey's agenda is NOT to stay Stateside after my demise. The more I put into a taxable account, the more she'll have readily available, without worrying about the arcane, convoluted tax rules. Whatever she inherits within a T-IRA, she'll have to wait until 59 and a half to get at it, without burning up a quick and instantaneous 10% tax penalty.
This is do-able, and the more she has sitting in a taxable account, the better. At this point, we don't need to worry much about sheltering big profits and worrying about a sizable income. We've relocated to where we want to be for now. A dream come true, though we don't by any means live in a palace. Extended family is here to be of help, and they're great. Wifey will get a car, I won't even bother. 4 cars, in a single household. People are busy, just not ME. I can use my bus pass anytime to see ALL of Oahu, unlimited. I could circumnavigate Oahu on the bus every single day if I want! The senior yearly bus pass is less than one-twelfth of a standard annual pass. That's the difference between groceries or no groceries for over a month. Can you see me smiling from here?

i own 12 balanced funds they are dodbx, hblix, jabax, jpvtx, lkbax, mbeax, msfrx, trxix, wbalx, ittax, mapox, vgwlx. in 2008 when the S&P dropped around 37%, my portfolio of balanced funds dropped around 22.8% which hurt. but it was better than an all stock fund portfolio. my thinking is that its impossible to time the market so you have to stay in it all the time but you should lower your risk by owning both stocks and bonds. im 56% stocks, 39% bonds, 4% cash according to fidelity.

Thanks @Catch22 - Apparently T Rowe is interpreting Michigan’s law more conservatively. However, one wonders than what the purpose of the Michigan W-4P opt-out form is if funds and their shareholders aren’t required to observe the mandatory withholding regulation. I’m not doubting your word. I’ve spoke to other funds’ personnel who also seem to interpret the law more loosely than Price does. Different cultures. Different legal professionals I assume.
Here’s form W-4P https://www.michigan.gov/documents/taxes/4924_365368_7.pdf
Here’s a clarification of Michigan's law. Note that it specifically notes that IRAs are treated the same as “pensions” within the purview of the law. What are retirement and pension benefits? - https://www.michigan.gov/taxes/0,4676,7-238-43513-397990--,00.html

For $100k minimum, I'd want a free coffee and a Danish with that purchase, served up fresh by Atteberry.

@johnN, here's a suggestion, the best and easiest way to convey what is in the article you are posting is to copy/paste the 1st paragraph. This is what Ted used to do. For example on this one:

Flight to quality describes how investors react and manage their portfolios during periods of stock market volatility. This strategy favors more conservative investments in lieu of riskier ones. Here’s what flight to quality means and how it can potentially impact your investment portfolio.

The 1st paragraph is meant to describe what you can expect in the rest of the article. It lets us know if we want to open the link and read farther. Not being critical, just trying to help out. I appreciate your efforts to try and fill some really big shoes.

https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/flight-quality-171827578.html
Flight to quality
From smart asset
-SImply put, flight to quality moves some of your investment capital from riskier investments.-

Howdy crash,
Roth. It's affordable to switch at this point; any income she has going forward (and she's only 46), you will probably be able to afford to stick into the Roth; it gives you an aspect of wealth diversity and financial control that no other instrument does.
Wifey and I both have Rollover IRA's, she has a Roth, and a taxable account [read: deferred, deferred, exempt, taxable]. I have a DB pension, both on SS and now we're 71 and 70 both subject to RMDs. Both working part time. The Roth gives me additional flexibility with management.
good luck and so it goes,
peace,
rono

@Gary1952 What browser are you using?

“ undesired withholding done by the custodian, without them communicating with us?”
Depends on the definition of “communicate.” With T. Rowe when withdrawing tax-sheltered funds online a pop-up appears stating that Michigan requires “mandatory withholding” and that a specified percentage will be withheld. Unlike Federal withholding, you do not have the option to “decline” at that time.
That’s the “default” option. However, Michigan also allows taxpayers to “opt-out” of mandatory withholding in advance by submitting form W-4P to the custodian ahead of time. I send in a new one every January 1 to custodians where I expect to take IRA withdrawals during the year. Doing that, I’ve had no trouble taking distributions free of withholding. As a safeguard, I first deposit the proceeds into a non-retirement account with the same custodian. This, I believe, would make any later corrections, if needed, easier to transact. Don’t put too much faith in what the custodian says over the phone beforehand. The knowledge level varies greatly. It’s best to dot the “i”s and cross the “t”s in advance.
Re Roth Conversions. My best recollection is that all 4 firms where I did in-house conversions (Traditional to Roth) had a check-off box in the paperwork allowing one to decline Federal withholding on the amount being converted. There were no problems.
I’ll be forever grateful to the front office folks at D&C and Oakmark. I phoned both on Friday March 6, 2009 to inquire about a Roth conversion. The stock market was plummeting - as it had been for over a year. Both advised me to download the paperwork, which I completed over the weekend, and provided instruction. I called the PO and was informed the documents could be delivered on March 10 if I got them to the post office by 1:00 Monday the 9th. On the 9th a terrible snowstorm hit our area in the early morning hours. I remember driving 10 miles over barely passable roads to get the documents to the nearest post office by 1:00. But it worked. Both firms received the documents on Tuesday, March 9 and effected the Roth conversion at that day’s close. As it turned out, the market bottomed Monday, the 9th. Tuesday the Dow bounced around 300 points. So my conversion missed the absolute market bottom by 1 day. :)
(Note: I tend to think of those 2 conversions a being just 1, as they occurred together on the same date. And I’ve long since co-mingled / transferred those accounts.)

https://www.kiplinger.com/article/investing/T041-C009-S002-vanguard-high-yield-tax-exempt-don-t-call-it-junk.html
Vanguard high yield tax exempt don-t call it junk
'Names can be deceiving. French fries aren’t really French, and Vanguard High-Yield Tax-Exempt fund (symbol VWAHX) isn’t a high-yield bond mutual fund. In the bond investing world, the words high yield are interchangeable with junk—meaning bond issues rated below investment grade that pay high yields and come with an elevated risk of default. Vanguard High-Yield’s peer group, however, is muni bond funds with long maturities. Though the fund’s 15% stake in junk-rated or unrated muni debt is higher than the category average of roughly 4.5%, the typical fund in the actual high-yield muni category has 10 times that much—45%—in junk and unrated bonds.'

@Crash, Could the current custodian of that 403(b) perform the initial rollover to an IRA? Whatever it’s now invested in would remain the same for that purpose. Once you’ve moved that money into a traditional IRA you should be able to perform IRA transfers to whatever custodian(s) you want. The IRAs can later easily be converted to Roths all together or in chunks.
That’s what I did with my 403(b) - which was already with TRP. Price was most helpful in facilitating that rollover. The funds I was invested in stayed the same. No money moved. Just a bit of paperwork. Later, I diversified away from Price into some other houses by doing simple IRA Transfers. Paperwork for an IRA transfer takes less than 15 minutes. Pretty basic. Just mail it in.
Changing from a 403(b) designation to IRA status would seem the important first step. Later, deciding which portions of the IRA to convert to Roths and how to time those conversions requires more foresight and planning on your part. The whole chunk doesn’t have to be converted at once. I found it simplest and most convenient to convert 100% of my holdings at different houses in 3 different years. It also allows you to pick the most opportune investments to convert at different times.
PS - In a 403 plan the employer controls it. In an IRA you have control. Big difference.
Just some ideas FWIW

Also affected: Gabelli ESG Fund, Inc.
The above verbiage applies to the Gabelli ESG Fund, Inc.
https://www.sec.gov/Archives/edgar/data/1391839/000119312519325039/d854762d497.htm

Thanks, everyone. Wife will not have worked at all for pay between Oct 11th and December 31st, 2019. I'm not working at all, taking SS and pension. I'm 65, she's 46. My reference to "not making enough money from which to deduct contributions into Trad. IRA" is a throwback to my own situation a couple/few years ago. We file jointly. There have been 3 years, lately, when my Trad-IRA contributions were non-deductible. (So, I've stopped putting any money into it.) Not because we maxed-out to the IRS-declared legal deductible limit and went beyond it, but because there was not enough income to be TAXED. And late in 2019, we moved from Massachusetts to Hawaii.)
(My tax guy explained the procedure and percentages and steps and nonsense and crapola and bullshit re: exactly what kind of mathematical formula the IRS uses to let me get at that $7,000 total in non-deductible (and zero tax owed) contributions. Clearly, some Martian with 8 brain cells and both male and female genitalia and no experience at all on planet Earth came up with that idiotic gobbledigook.... Now that I'm of age, I COULD take out the non-taxable amount without penalty. But it can't be done simply by taking the $7,000.00, since that's the non-taxable total amount in the account. The IRS requires that it be done over time, in order to preserve the tax-free status of that full amount. M-I-C... K-E-Y....... M-O-U-S-E.)
So, I'm hearing great things from you all about the Roth.
Is it not possible to convert the 403b DIRECTLY and TOTALLY into a Roth? Maybe that IS possible, but for some arcane reason, should not be done? Because the conversion (of whatever amount) triggers a taxable event?
Note: together, we will be WAY below the 12% tax bracket's income limit. PLENTY of room, there. BUT: maybe converting the 403b entirely in a single year might be the difference between owing no tax at all, and owing SOME tax.
I'm re-reading my entry, here. I'm going to just finish here. I'm only going to add this, which is the same thing I've volunteered to say to some customer rage and aggravation agents (aka "customer service") on the phone, just today, in fact: NOTHING should be THIS complicated. :)

Somewhat in that wheelhouse, I bought some KYN (a MLP/Midstream CEF) at the start of the month. Its up about 13% through today's close, so it seems as though at least a short term bottom has been established....hopefully more!

@John - why would you stop the Roth and start a SEP-IRA?

...small business owner, tax reasons...save much more in tax long term since we contribute upward of 60s K [both of us] ...
You can have 401k /sepIRA /pensions at same time as long as we don't contribute more than certain amount per yr
About 15s year til retirement probably best route to go w sep IRA in our situations

Still not clear. Having self-employed income explains why one would start a small business retirement plan such as as SEP. But it doesn't explain why one wouldn't continue funding a Roth IRA.
The only requirements for contributing to a Roth are that you have compensation and that your MAGI does not exceed certain values. A SEP reduces your MAGI (see #5 in this Kiplinger piece). So if you met the MAGI requirement before starting the SEP, you should be able to meet the MAGI requirement now; the SEP just makes it easier.
The other requirement is that you have compensation. The SEP limits your contributions to 25% of your business' profits (that's 20% after counting the SEP contribution as a profit-reducing expense). So you've still got 80% of the business profits as income. That income could be used to contribute to the Roth.
Hence the confusion. Why stop contributing to a Roth IRA?

I am taking a close look at increasing my SEMMX position in my taxable account. I only have a small foothold position of SEMMX in my taxable account, primarily because it is not a tax efficient bond oef. I have held a relatively large position of SEMMX in my IRA account, where tax efficiency is not important. SEMMX is such a smooth performing fund, with no significant dips in its performance history, produces a TR of 4 to 5% pretty consistently. I am thinking that if I keep the position relatively small, the taxable consequences will not be significant. Some posters will consider SEMMX/SEMPX risky because of the low credit rating of its portfolio, but it seems the portfolio managers have done an excellent job, of managing this risk, with its arsenal of investing strategies allowed in a nontraditional bond oef. It has a Standard Deviation below 1, so it resembles smooth performance of funds like DBLSX, but with better total return.