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Polo225
Returning Member

Federal TSP withdrawal one time and NJ tax help

I am retired federal employee living in NJ.  This past year I took a one time withdrawal from my federal TSP (a federal 401k).  In NJ the contributions made to my TSP are taxed, so not all of my withdrawal is taxable.  I am having a tough time figuring what to do in turbotax both state and federal.  I need to make sure the NJ return does not tax the money I contributed....  Any guidance would be greatly appreciated

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3 Replies

Federal TSP withdrawal one time and NJ tax help

Section 401(k) Plans
If you made contributions:
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;
see here: https://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git1.pdf

 

@Polo225 

Polo225
Returning Member

Federal TSP withdrawal one time and NJ tax help

I appreciate your reply, however, I did not ask about a 401(k). I asked about a federal TSP. Thrift savings plan. Federal TSP‘s are different than a 401(k). A 401(k), your rules apply that you just posted. A federal TSP in the state of New Jersey, all contributions to the TSP are not tax deferred. Therefore, in order to not be double taxed, when I take a withdrawal, there is a formula that you need to calculate to figure out how much of your TSP withdrawal is taxable in the state of New Jersey. I have that information, however, I have no Idea how to enter the data in TurboTax

Federal TSP withdrawal one time and NJ tax help

Those previously taxed TSP contributions become your NJ basis. When you later withdraw from the TSP, NJ allows an excludable portion representing recovery of that basis—calculated under:

  • the Three-Year Rule (if you’ll recover your contributions within 36 months and your employer contributed), or

  • the General Rule (otherwise).

 

TurboTax should let you pick one or the other.

@Polo225 

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