Am I subject to NJ State Tax when I make a 401K withdrawal?

Yes,  If you live in New Jersey pension and annuity income are taxable and must be reported on your New Jersey Income Tax return.  In  some cases, the taxable pension or annuity amount that you report on your New Jersey return may differ from the amount reported on your federal return.

However, NJ has a Retirment Income exclusion, which the program will credit as applicable after you enter the 1099-R.