Self Employed Profit Sharing Contributions NJ Tax Deferred

[ash49]

I have a Sole Proprietorship consulting business.  I have a Profit Sharing/401K plan to which I contributed for the Profit Sharing part in 2021.

Are Contributions to Profit Sharing plan (an IRS Qualified Retirement plan) tax deferred (Not taxed now but at the time of withdrawal) for NJ taxes?

[DavidD66 · Accepted solution]

Yes.  You will not pay federal or state income tax on the amount you contribute to your retirement plan.

[DavidD66]

Distributions from your retirement plan will be taxable income at the time of withdrawal.  

[ash49]

Thanks.

[ash49]

@ DavidD66 - Thanks for your prompt reply.  Just to be sure, the Profit Sharing contributions as a self employed person (apart from the $26K 401k with catch up) does qualify for NJ state tax deferral? Appreciate a confirmation.

Thanks.

PS: My Third Party Administrator for my self-employed retirement plans has a combined 401K/profit sharing account 

[DaveF1006]

Yes, self-employed contributions to  401K plan are deductible just as long as the contributions do not  exceed the federal limits according to NJ sources. 

@ash49