401k

[Pb242]

I never know whether to put 3 year rule  , general rule or none appy for 401k distribution in NJ

[DianeW777]

It depends on when your contributions to the 401(k) were made. See the New Jersey (NJ) rules below. If you meet the criteria in 1 below, then you would select 'None apply'. If you meet the criteria for 2 below, then you would use the General Rule. You need to find out if you have any contributions that were taxable to NJ when they were made.

• NJ Retirement Income Rules

Section 401(k) Plans If you made contributions: 

1. On or after January 1, 1984, your contributions to your 401(k) Plan were not included as income when they were made, unless the contributions exceeded the federal elective deferral limit. As a result, you must report all distributions on your New Jersey Income Tax return because they are fully taxable; 
2. Before January 1, 1984, your contributions to your 401(k) Plan were included in your income when they were made. If you made contributions to a 401(k) Plan before January 1, 1984, or you made contributions beyond the federal limit, use IRA Worksheet C to calculate the taxable and excludable portions of your distribution.

 If all contributions were not included in your NJ income all distributions are taxable. If any of your contributions were part of your NJ income then the general rule is used to pay tax on only the earnings part of the distribution. Your plan administrator should be able to help you with the details.

The three year rule would only apply if you will recover your cost in the plan within three tax years after distribution begins and only if you have any contributions made before 1984.