GeorgeM777
Expert Alumni

Retirement tax questions

If you have a 1099-R, what codes have been entered in Box 7?  TurboTax may be applying a tax on the entire amount converted to the Roth IRA because as of January 1, 1984, and according to the NJ Division of Taxation, contributions that employees made to 401(k) plans from their wages were not taxed.  Since the contributions were not taxed when made, they are fully taxable when you receive a distribution (withdrawal).  If you made contributions to a 401(k) plan before January 1, 1984, your distribution will be treated differently than if all the contributions were made after that date. 

 

NJ Tax Guide_Retiring in NJ

 

It does not appear that the three-year rule and the general rule apply to Roth IRA distributions.  The three-year rule and the general rule related to contributory plans, other than IRAs.  If you were required to contribute to your retirement  plan, it is a contributory plan. Contributions are usually made through payroll deductions, and, in general, have already been taxed. Your contributions are not taxed when withdrawn.  However, any employer contributions and earnings that have not been taxed must be reported.

 

If you had a contributory plan, and began making withdrawals, you would need to determine the taxable and excludable parts of your distribution. There are two methods you can use to calculate the taxable and excludable parts of a distribution: Three-Year Rule Method and General Rule Method.  

 

NJ Income Tax – Retirement Income

 

@BillNJ

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