My understanding is that NJ treats all contributions to an IRA as though they were taxed when made by you or the original owner of the IRA - just as they would have been had they been made in New Jersey. That is, regardless of in which state these contributions were originally made, NJ will use them as an exempt basis for determining the taxable portion of the earnings on them (and apply this ever-declining fraction to the amount of your distribution each year). Each year Turbo tax will bring forward the remaining balance of the exempt amount until final distribution of the IRA. Hope that helps.
