topic Turbotax not handling Roth IRA withdrawal correctly for NJ state in Retirement tax questions

Turbotax not handling Roth IRA withdrawal correctly for NJ state

BhSe — Fri, 13 Feb 2026 19:06:42 GMT

2025 is the first year when both my wife and I have withdrawn from our Roth IRA accounts and we are using the free version of TurboTax provided by Fidelity Investments (most probably premier?). We are filing as married filing jointly. We have (for each of us separately) provided information about our Roth conversions over the last few years. In both our 1099-R forms, box 7 has "T". Based on this, TurboTax is claiming that our withdrawals are qualified (non-taxable) for Federal purposes, but are fully taxable (meaning that the entire amount is taxable) for NJ state purposes.

This seems incorrect as the qualification rules Roth withdrawals for Federal and NJ State are identical. Also even if it is true that that some part of the withdrawal is taxable in NJ, it cannot be the entire amount. That seems obviously incorrect. I suspect that there is some way to answer the questions differently to get around this problem, but how? Please help.

Re: Turbotax not handling Roth IRA withdrawal correctly for NJ state

BhSe — Fri, 13 Feb 2026 20:05:08 GMT

As a follow-up to my post describing my problem, I just talked to Fidelity and asked them to change code "T" in box 7 to "Q" and they responded by saying that they do not use "Q" regardless of the actual status of the withdrawal. They do not dispute the fact that the withdrawal is non-taxable. This means that they are not willing to change the 1099-R in any way. This leaves only two options for me: (1) TurboTax should find me a solution or (2) I have to do my taxes manually. Please help!!!

Re: Turbotax not handling Roth IRA withdrawal correctly for NJ state

BhSe — Fri, 13 Feb 2026 23:05:55 GMT

I have shared my return with an agent and the token number is 1329597.

Re: Turbotax not handling Roth IRA withdrawal correctly for NJ state

BhSe — Thu, 19 Feb 2026 21:36:15 GMT

@DaveF1006 Can you please look into my problem described above. I have shared my return so you should be able to look at what is wrong. I am going berserk in trying to figure out what I should do to fix my problem.

Re: Turbotax not handling Roth IRA withdrawal correctly for NJ state

Vanessa A — Thu, 12 Mar 2026 13:12:03 GMT

As of last night, this issue has been updated. You will now see in the NJ section a statement that says NJ does not tax Code Q distributions. Although you entered it as a T, this is because the fund isn't committing to code Q which makes it nontaxable. Once you answer some of the questions in the federal section after entering your 1099-R, TurboTax is then saying yes you qualify and making the income nontaxable in NJ as well. @BhSe