For my NJ state return, turbo tax says it deducts income contributed to a 401K plan but does not deduct that income if it was contributed to a 403B plan. Is that correct? Why do I have to pay a lot more taxes to NJ because I work in a non-profit? Please help!
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That is correct, and is per NJ state law.
On the NJ state level, your 403(b) is an after tax contribution. When you start making withdrawals, you must know your cost basis, which is the sum total of all your 403(b) contributions. The portion of your withdrawals that represents basis is tax exempt in NJ.
The same is true of a Traditional IRA.
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