State tax filing

You will have to indicate in the Federal Taxes section when you enter the 1099-R information.  You will see a screen "Where is your distribution from?" 

General rule: You must use this method if you won't recover your contributions within 36 months from the date you receive your first payment from the plan, or your employer didn't contribute to the plan. Use this method to calculate a percentage of your annual benefits that is not taxable in New Jersey. Once you calculate the nontaxable percentage, it'll be used for all distributions from this plan in the future.