I have the same problem. The step by step method incorrectly uses the W2 box 16 of NJ taxable income and pulls it into the compensation (W-2) area of the NJ1040. It should be on on line 20b .
The only work aronund I found was to put a zero in box 16 of thr W-2 step by step, then enter that amount in the pension work sheet part D on the form view. Line one is your total contributions to the plan, line 2 total in plan and line 4 yout distribution this year. The program will figure out how much to put on line 20 a and b on the NJ 1040. If you don't zero out the step by step W2 state income, you will pay tax on this amount twice.
Hopefully, Turbotax will fix this.
