NJ Div of Taxation brochure GIT-1&2 states
IRA Contributions, Rollovers
If you qualify to convert an existing IRA to a Roth IRA for federal tax purposes, you also qualify for New Jersey
tax purposes, even if your New Jersey taxable income is more than the federal limitations. You can withdraw all or part of the assets from a traditional IRA and reinvest them in a Roth IRA. In most cases, your contributions to a traditional IRA were previously taxed. Only the earnings are taxable to New Jersey in the year you roll over the funds.
So, IRA contributions were made annually while I worked and the IRA account grew over those years, does that mean only the earnings above the contributions are taxable when funds are transferred from an IRA to a Roth IRA?
Example: IRA contributions from 1990 to 2000: $20,000. Grew to $50,000 in 2021. If $20,000 is rolled over into a Roth IRA, would that mean no taxes are due on the $20K rollover? Then when the $30k is rolled over, it would be fully taxable in future conversions?
Thank you.
