On NJ Step re: Roth conversion, is "Value of Acct on Date of Distrib" really the conversion amt itself? =Only way non-taxed same as reg-IRA distrib; & NJ treats both same

[wbrianb]

In NJ, the rules for determing what portion of an IRA distribution is taxable can be complicated for people who have an IRA that includes investments rolled over from a 401k. And according to NJ's website, Roth IRA conversion amounts are to be treated the same way as regular IRA distributions for tax purposes. So why does TurboTax (Premier) treat them so differently and unintuitively?

When a return includes a Roth conversion (identified by one of the Federal "EasyStep" questions), one of the NJ EasyStep panels that crops up in the "adjustments" section asks for two figures: (a) Value of Account on Date of Distribution; and (b) Contributions Related to This Distribution Previously Taxed by New Jersey". There is a "Learn More" link for (b) describing the complicated calculation that TurboTax is leaving to the user for how much of the distribution should be treated as non-taxable. And there is no help available at all for what is meant to be entered in (a). After much consideration and trial & error, I think what has to be entered in (a) is actually the value of the distribution itself, i.e. the Roth conversion amount. This seems to be the only way that the right amounts end up on the NJ 1040 for line 20a and line 20b. By contrast, if the IRA distribution is *not* characterized as a Roth conversion during the Federal EasyStep, then TurboTax helps the user with a much clearer process and documentation for the non-taxable amount.

The machinations of both paths are documented in a NJ-specific worksheet named "Pensions Wks-TP". For the Roth-conversion path, Columns D thru H on the top half of this form get populated and lead to an entry on Part A line 7b. (Note also that the heading for col D here says simply, and I think more accurately, "Value on Date of Distribution" unlike "Value of Account..." in the EasyStep it came from.) For the non-Roth path, by contrast, Part B is used and leads (in a much easier to follow way, since it is helping the user do what the LearnMore link says to do manually) to an entry on Part A line 7a. Again, per NJ, the answers must be the *same* from the two paths. And the only way I can find to have TurboTax show the Roth-path entries for NJ1040 line 20 answer to be the same as for the non-Roth path is to set the Roth-path entries as: EasyStep (a) = Wks Col D = the conversion/distribution amount itself; and EasyStep (b) = Wks Col E = the non-taxable amount calculated on the non-Roth path = the difference between the conversion/distribution amount and what would then have been on Wks Part B line 7a.

(BTW, your 170 character limit for the question above made it hard to frame...)

[fanfare]

"This seems to be the only way that the right amounts end up on the NJ 1040 for line 20a and line 20b."

If you get the correct result on your NJ return, that is the way to do it.

This assumes you are competent to calculate the non-taxable part correctly.

@wbrianb