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Level 2
posted Feb 20, 2020 4:53:19 AM

457B tax question

I will be receiving the first of three annual distributions from a 457b plan this year in the state of NJ (approx $200K.) The employer made no contribution to the plan. State tax was paid on my contributions.  Assets grew to about $80,000. (contributions approx $120K.)  Which accounting method would I use to calculate my state tax liability?  The reason is trying to determine if I will owe state tax next year and apply some of this year's refund or will I owe tax after I receive $120K?

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1 Replies
Expert Alumni
Feb 20, 2020 9:47:15 AM

If you will be recovering all of your contributions back in the three year period. It will ask after you enter the 1099-R in the federal side how you are treating it for NJ use the selection for 3 year rule pension. Otherwise use the General pension rule.

When you get to the NJ return it will ask for you basis or amounts previously taxed.