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401K distribution; how to classify for tax purposes based on choices provided in Turbotax

after entering the 1099, it's asking me to select the source of the distribution and any other NJ information

Choices:

 - Military benefit or survivors benefits

- Disability benefits (under age 65 only)

- Three Year rule pension or 401k benefits

- General rule pension or 40k benefits

- None of the above

 

Military and disability benefits don't apply to me.  I don't know which of the other 3 to select.  If I select "general rule", it gives me a refund on my state of NJ return,  I don't think it's three year pension rule based on the defnition.   If I select, "none of the above", the amount of the distribution becomes taxable in NJ.  Help!!

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3 Replies
AmyC
Employee Tax Expert

401K distribution; how to classify for tax purposes based on choices provided in Turbotax

The 3 year rule should only be chosen if you will get all of your money back in 3 years. General rule will determine the taxable part of a distribution from a contributory plan other than an IRA.

 

NJ taxes retirement savings while working and then gives an exclusion for retirement pay. See page 21 of Resident Income Tax Return Instructions lines 28a and 28b for exclusions.

 

To see your forms and verify you are getting the correct exclusion:

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401K distribution; how to classify for tax purposes based on choices provided in Turbotax

Thanks Amy.  Can you tell me what the "simplified" method is? and how that relates to the "General Rule" if at all?

 

 

CatinaT1
Employee Tax Expert

401K distribution; how to classify for tax purposes based on choices provided in Turbotax

This link will give you a good explanation of the difference: Simplified Method vs General Rule

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