Retirement tax questions

No.  Retirement distributions are taxable as income on your New Jersey and your federal tax returns.  The exceptions for using the withdrawal from certain retirement accounts for medical expenses apply to the penalties for early withdrawals.  In every case, if you contribute to a tax deferred retirement account your distributions from that account must be included in your taxable income.  Some states have exceptions to taxing retirement distributions, but New Jersey is not one of those states.