The Cloverdell distribution is reported on Form 1099-Q. The federal side of TurboTax won't report the distribution as a taxable amount if it doesn’t exceed the amount of the student's qualifying expenses, but to make sure that New Jersey carries this information, you'll need to work directly in the state return.
On the State tab, search for 1099-Q and input the information.
Here is a TurboTax article that explains form 1099-Q
