I contribute to my 401k before taxes. Does nj state see that as income still?

[Cynthiad66]

In New Jersey, contributions to a regular 401(k) plan are exempt from income in the year contributed. Therefore, you have no basis in your 401(k) plan, so withdrawals are fully taxable.

[fanfare]

No deduction in NJ for your 401K contribution nor for IRA contribution.

For IRAs you need to keep good records.

[SteamTrain]

@fanfare    Careful... pre-tax 401k contributions are handled different from other plan types as to whether they are excluded form NJ wages :

"The wages you report for federal tax purposes may be different than the wages you report for New Jersey purposes. ... New Jersey does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans, other than 401(k) Plans" 

State of NJ - Department of the Treasury - Division of Taxation - NJ Income Tax Wages

[fanfare]

It may say that on the website, but on my brother-in-law's W-2 I don't see any reduction in state wages for 401k.

And I never saw it on my own W-2 when I was working in NJ.

[draghi-eric]

From what I saw its excluded when its an employee of a company contributing to the plan not person 401k or IRA

[SteamTrain]

@fanfare 

I checked my last Full year NJ W-2 from 2001, and the full amount of the 401k contribution was deducted from the NJ state wages (box 16). 

It would have matched box 1 exactly...except there was ~$490 added back to NJ wages for some other Federal Cafe 125 deduction that NJ didn't allow...don't recall what that was for now 20 years later.

[fanfare]

@draghi-eric 

 Why do you post the question?

Do you see a big difference in the taxable amounts, approximately  equal to your 401k contribution, or not?

[tcaliendo]

The reply makes no sense, ARE THE CONTIBUTIONS EXCLUDABLE, no one said anything about whether withdrawals are excludable!!!!

[DianeW777]

Yes, contributions to your 401(k) are excludable for New Jersey (NJ) income tax. Here is an excerpt from the NJ Department of Revenue:

• If you are a New Jersey resident, wages you receive from all employers are subject to New Jersey Income Tax. Wages include salaries, tips, fees, commissions, bonuses, and any other payments you receive for services you perform as an employee. You must report all payments, whether in cash, benefits, or property. 

The wages you report for federal tax purposes may be different than the wages you report for New Jersey purposes. For example:

• New Jersey does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans, other than 401(k) Plans.
  • NJ Income Tax - Wages
• Thank you for the assist @SteamTrain.  The answer has been updated.
• @tcaliendo 

[Edited: 02/15/2022 | 1:00p PST]

[SteamTrain]

@tcaliendo 

I'm not sure which end you are coming from...contribution phase or distribution phase. 

BUT

1)  During the contribution phase, a NJ person contributing to pre-tax $$ to a 401k plan thru the employer's plan, does have the $$ deducted from NJ wages in box 16 of the W-2  (not talking about ROTH 401k's here)

2) when you take a "Distribution" from that 401k plan, later , for a NJ resident, those $$ are fully taxable  (Unless contributions were made before 1984)

................From page 14 of the NJ Tax Topic Bulletin GIT 1&2 :

"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."

____________________________________

Link to the GIT1&2 at the bottom of page here:

State of NJ - Department of the Treasury - Division of Taxation - NJ Income Tax – Retirement Income

[SteamTrain]

@DianeW777   not sure what you are trying to say here

, but the "other than 401k plans"   is the part we are discussing here.  

For W-2 forms, normal pre-tax 401k contributions are also exempted from NJ wages.

[fanfare]

NJ goes by the taxable amount.

If you had pre-tax contributions to a 401k or other similar pension plan,

that will show up in the taxable amount being smaller than the box 1 distribution.

Otherwise, if you have to apply either of the two "Rules", then also NJ will not tax the excluded amount.

[fanfare]

I figured out what was happening on my brother-in-law's W-2, so I retract my comment earlier that it is not subtracted from NJ wages.

I have no motivation to wade through all my old W-2 documents, so I concede.

[DANBRIGHT]

nonsense

in NEW JERSEY ira and 401k  are NOT deductible in the year those contributions are made  AND ARE FULLY TAXED  BY STATE OF NJ 

and therefore, there is a basis

  and the only thing taxable from withdrawal such as when you retire is any earnings on the 401k after contributions

however, this comment could explain why the turbo tax for nj tax incorrectly makes you pay taxes again  on the basis, that is on money you were already taxed on