NJ Roth Contribution Tax - 53 Yrs old

[neef]

Does NJ really tax Roth IRA withdrawal of contributions (I am 53 yrs old)?

Is that a double tax? 

[MinhT1]

No.

Please read this NJ Revenue document which says:

The New Jersey Income Tax treatment of Roth IRAs conforms to the federal treatment. Direct contributions to Roth IRAs are not deductible and qualified distributions from Roth IRAs are not includable in New Jersey income.

[neef]

Thanks. I read it but there is this part...I am 53

My question is why? I am only withdrawing the contributions, which have already been taxed.

Qualified Distributions From a Roth IRA

A qualified distribution from a Roth IRA is excludable from income and should not be reported anywhere on the New Jersey tax return. A qualified distribution is one made after the five-year period beginning with the first tax year for which a contribution was made to the IRA, and that is:

• Made on or after the date the individual reaches age 59½; or
• Made to a beneficiary (or the individual's estate) after the individual's death; or
• Made because the individual became disabled; or
• Made as a qualified first-time homebuyer distribution as defined by the Internal Revenue Code.

[DanaB27]

Unfortunately, since you are under 59 1/2 this is a nonqualified distribution in NJ and therefore taxable in NJ.

Nonqualified Distributions are distributions not made under one of the four circumstances you mentioned and have Code J or T in box 7 of the 1099-R.

Other exceptions are:

If there is a Code T in box 7 of the 1099-R, and the distribution was made after the five-taxable-year period, it will be considered a qualified distribution and not taxable in New Jersey.

If there is a (1) Code J in box 7 of the 1099-R, and (2) the distribution was made after the five-taxable-year period, and (3) the distribution was allocated to a a first-time home buyer distribution as defined by the IRS, the home allocation will be considered a qualified distribution and not taxable in New Jersey.

[neef]

Box 7 has a J in it. Is that incorrect?

I held this IRA for over 5 years.

[DanaB27]

No, code J is correct since you are under 59 1/2.