I have green card and relocating permanently outside USA. How long if I stay outside USA, do I NOT need to pay California state tax on my US income? I'm looking for the best time to cashout my IRA. If I overstay, I cannot re-enter with the green card. Will I be subjected to 25% withholding if I overstay even though I haven't formally surrendered the green card? Thanks

Once you are outside of the U.S. for a year, California will have NO legal standing to tax the IRS distribution.

However, if you cash out your IRA ANY time prior to you turning 59.5 years of age, you WILL pay the 10% Early Withdrawal Penalty.

Once you move out of CA permanently you have no further tax obligations with them. If you cash out your IRA while still a CA resident you will owe federal and state income tax on the pre-tax contributions and earnings. They will automatically withhold 20% for federal taxes and nothing for CA. But if you wait until after you leave the US you will owe federal tax but not CA tax (as you are no longer a CA resident when you receive this income). They will automatically withhold 30% for federal. In either case you are expected to file a federal tax returns for 2012 and calculate the correct amount of taxes. And as AtlantaTaxExpert noted, you will also owe 10% early withdrawal penalty ofyou are under 59-1/2 years of age.