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Retirement tax questions
This is my second year in retirement (second year receiving pension). The New Jersey state pension rep explained to me that the first several years are generally tax free as first the employee contributions are distributed. For me, this is equates to about the first three years of pension. After the employee contributions are paid out, the pension payments become fully taxable (year 4 for me). Payments are not prorated between taxable and non-taxable. Only boxes 1 (Gross distribution) and 2a (Taxable amount) have amounts which both have the total amounts of pension payments I received in 2023. The "plan" does not track the amount of taxable or non taxable amount on your 1099-R. When you retire, NJ Division of Pension and Benefits provides a printout of the total member contributions. For my 2022 return, I was able to enter the "taxable" amount from the 1099-R but at some point was then able to exclude it from my overall income.