How Enter NJ State Pension General Rule

[Stevenbirn]

Hello.  I just started receiving my teacher's pension in 2025 for five months.  Being that my monthly pension payment will not equal my contributions in 36 months I have to use the General Rule.  In Turbotax they ask "Contributions made to the plan (basis)" which I understand is my total contributions.  Then they ask "Expected return on contract".  What is this value supposed to be?  If it is an expected return how do I calculate it?  Thank you in advance for your assistance.

[LaShaunA3]

Under the IRS General Rule, your “expected return on contract” is the total amount you expect to receive over your lifetime from the pension. It’s calculated by multiplying your annual pension amount × your IRS life expectancy factor.

For more information, see,

Publication 939

[Stevenbirn]

Thank you for your response.  Since it is a qualified plan and will not cover my contributions in 36 months I have to use the General Rule - Simplified Method.  The IRS Publication 575 gives the worksheet and it is easy to calculate.  The only problem is that Turbotax does not give me the option for New Jersey to use the simplified method, in my case dividing my contributions by 260.  It only allows me to use the life expectancy factor.  The only way I can think of doing it is to back into what the future value is by using the result.  Is there a way Turbotax will do it correctly for the Simplified Method?

[AmyC]

To trigger the Simplified Method option for NJ, follow these steps:

1. Go back to the Federal section → Wages & Income.
2. Edit your 1099-R.
3. Ensure Box 9b (Total Employee Contributions) contains your total pension basis (your contributions).
4. When asked "What kind of plan is this?" select Qualified Plan.
5. 403b I assume which in an annuity
6. RMD is the full amount
7. TurboTax might ask if this is a "Qualified Plan" and if you want to use the Simplified Method. Select Yes When I created your situation, it did not ask, it used the simplified due to all the answers before.
8. Once the federal side recognizes it as a Simplified Method calculation, it usually carries that "logic" over to the NJ state return. I checked in NJ and it did carry over correctly - using blank for the federal simplified method instead of the 3 year, general or military options.

If that doesn't work, the backdoor method / example:

If your Simplified Method calculation (Contributions / 260) says your monthly tax-free amount is, for example, $100:

Note your annual tax-free amount ($1,200).

In the General Rule section, adjust the "Expected Return" figure until the resulting taxable amount matches your Simplified Method worksheet.

Congratulations on retirement!

[Stevenbirn]

Hello Amy, thank you very much for your reply.  It is a pension so when I get to the screen where it asks "Where is your distribution from?"  do I answer "General rule or 401(k) benefits" or "None of the above" to use the Simplified Method?  I was able to get it to work through the backdoor method but I would like to use your first suggestion.  Thank you again.

[RobertB4444]

You'll answer "General rule or 401(k) benefits" to trigger the task list that @AmyC laid out for you.