Escape the Empire State's Crushing Tax Burden
New York high earners face the highest combined state and local income taxes in America. Section 7702 offers a legal path to tax-free retirement income—without leaving the state.
The New York Tax Reality
New York State Tax Brackets
| $0 - $8,500 | 4.00% |
| $8,500 - $11,700 | 4.50% |
| $11,700 - $13,900 | 5.25% |
| $13,900 - $80,650 | 5.50% |
| $80,650 - $215,400 | 6.00% |
| $215,400 - $1,077,550 | 6.85% |
| $1,077,550 - $5M | 9.65% |
| $5M - $25M | 10.30% |
| $25M+ | 10.90% |
*Plus 3.876% NYC resident tax if applicable
NYC Residents: It Gets Worse
Add federal taxes (up to 37%) and you're looking at combined rates over 50% on ordinary income—including your 401(k) distributions.
The $500,000 Problem
NYC high earner with $500,000 income: How much goes to taxes?
Section 7702: Your Legal Exit Strategy
❌ Traditional Path (401K/IRA)
- Up to 37% federal tax on withdrawals
- Up to 10.9% NY state tax on withdrawals
- Up to 3.876% NYC tax on withdrawals
- Required distributions at age 73
- Triggers Social Security taxation
- Heirs pay income tax on inheritance
✓ Section 7702 Path
- 0% federal tax on policy loans
- 0% NY state tax on policy loans
- 0% NYC tax on policy loans
- No required distributions—ever
- No impact on Social Security
- Tax-free death benefit to heirs
Why This Matters for New Yorkers
With state + city taxes already taking 14%+ of every dollar, adding federal taxes on your 401(k) distributions means keeping less than half of what you "saved." Section 7702 changes the math entirely—you keep what you earn.
New York Professionals We Typically Serve
Wall Street Professionals
Investment bankers, traders, and fund managers earning substantial bonuses who need tax-efficient wealth building beyond traditional options
Partners at Law Firms
Attorneys with partnership income facing the highest combined tax rates in the country on ordinary income
Physicians & Surgeons
Medical professionals at NYC hospitals and private practices seeking tax-free retirement income strategies
Tech Executives
Leaders at NYC tech companies with equity compensation looking for tax diversification beyond RSUs
Media & Entertainment
High-earning creatives and executives in the arts, publishing, and entertainment industries
Real Estate Professionals
Developers, investors, and brokers with substantial income seeking tax-advantaged growth
Stay in New York Without the Tax Pain
You don't have to move to Florida or Texas to escape New York's crushing taxes. While many high earners are fleeing the state, Section 7702 offers an alternative: build tax-free wealth while staying exactly where you are.
Your career, your family, your network—they're all in New York. Section 7702 lets you keep your life while building a tax-free retirement fund that sidesteps New York's income tax entirely.
The Math: NYC Retirement Comparison
NYC resident, age 65, $1.5M retirement savings, $100,000/year income need
| Factor | 401(k)/IRA | Section 7702 |
|---|---|---|
| Gross Retirement Income | $100,000 | $100,000 |
| Federal Tax | $14,768 | $0 |
| NY State Tax | $5,722 | $0 |
| NYC Tax | $3,564 | $0 |
| Total Taxes | $24,054 | $0 |
| Net Spendable Income | $75,946 | $100,000 |
| Annual Tax Savings | — | $24,054 |
| 20-Year Tax Savings | — | $481,080 |
| Social Security Impact | May be 85% taxable | No impact |
*Based on 2024 tax brackets for single filer. Married filing jointly would have different brackets.
New York Areas We Serve
Matt Nye's Recommendation
"New York is the hardest state to build wealth in—purely from a tax perspective. You're already in the highest tax bracket in America. Every additional dollar you put into a 401(k) is just money you're handing to Albany and City Hall later.
If you're making $250K+ in the NYC metro area, Section 7702 isn't just a 'nice to have'—it's a necessity. You need a tax-free bucket that neither New York State nor New York City can touch.
The math is simple: Would you rather pay 50%+ combined taxes on your retirement income, or 0%? For my New York clients, this is usually the most impactful financial decision they'll ever make."
— Matt Nye, 20-Year Industry Veteran
Frequently Asked Questions
Can I avoid NYC taxes if I work in the city but live in the suburbs?
If you live in Long Island, Westchester, or New Jersey, you avoid NYC's 3.876% city income tax. However, you still pay NY state tax (if in NY) or your home state's tax. Section 7702 eliminates both state AND federal taxes on retirement income.
I work on Wall Street with variable bonus income. Does Section 7702 help?
Absolutely. Bonus income is taxed as ordinary income at the highest rates. Instead of putting after-tax bonus money into taxable investments, funding a Section 7702 policy creates tax-free growth and tax-free access later.
My employer doesn't offer a Roth 401(k). What are my options?
Even if they did, Roth 401(k) only solves federal taxes—you'd still owe NY state and NYC taxes on contributions. Section 7702 is funded with after-tax dollars but provides truly tax-free retirement income at both federal AND state levels.
I'm planning to leave New York for retirement. Should I wait?
Your 401(k) balance follows you, and you'll owe NY state tax on the contributions/growth if you withdraw before establishing domicile elsewhere. Planning Section 7702 funding NOW means tax-free income regardless of where you retire.
How does New York's estate tax affect this?
NY has a separate estate tax with a $6.94M exemption (vs. $13.61M federal). Section 7702 death benefits are generally not subject to income tax and can be structured to minimize estate tax impact. Proper planning is essential for high-net-worth New Yorkers.
Ready to Escape New York's Tax Trap?
See exactly how much you could save by building tax-free retirement income—without leaving the city you love.
Schedule Your NYC Tax Analysis →Free 30-minute consultation. No obligation. No sales pressure.