A) the three-year rule and the general rule have nothing to do with your IRA distributions.
only your basis, if any is of interest.
B) your inherited IRA must be kept completely separate from your own IRA.
C) your own IRA.
You have a basis in your IRA as far as NJ is concerned because you did not deduct IRA contributions from your NJ taxable income in all those past years.
Those are unrecovered.
See Worksheet C in the NJ Resident Return Instructions for how to avoid double taxation on that money (i.e. recover it) when you withdraw from your IRA. There is a first year calculation, and then a calculation for all subsequent years. OR use TurboTax to do it, it is the same thing but in a different presentation.
You will need good records showing what you put in over the years, or some way to reconstruct that information.
However, if the Retirement Income Exclusion eliminates your tax, the unrecovered calculation may become moot.
You qualify for the pension exclusion if:
- You (and/or your spouse/civil union partner, if filing jointly) were 62 or older or disabled as defined by Social Security guidelines on the last day of the tax year (December 31 for calendar year filers); and
- Your total income for the entire year was $150,000 or less.
In some cases your recovered contributions might be just enough to get your total income under $150,000, $125,000 or $100,000 which are the phaseout points.
