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Level 2

Question

NJ state income tax-- 403B versus 401K

Forum|Forum|7 years ago
June 6, 2019
1 reply
0 views

For my NJ state return, turbo tax says it deducts income contributed to a 401K plan but does not deduct that income if it was contributed to a 403B plan. Is that correct? Why do I have to pay a lot more taxes to NJ because I work in a non-profit? Please help!

TurboTax Deluxe Online

Alumni - Champ

That is correct, and is per NJ state law.

On the NJ state level, your 403(b) is an after tax contribution. When you start making withdrawals, you must know your cost basis, which is the sum total of all your 403(b) contributions. The portion of your withdrawals that represents basis is tax exempt in NJ.

The same is true of a Traditional IRA.

CMKAuthor

Level 2

Why are contributions to a 401K deducted? Why are these two (401K and 403B) treated differently?