to top

Division of Taxation

IRA Distributions

An Individual Retirement Account (IRA) is a personal savings plan that consists of your contributions and earnings plus certain amounts rolled over from pension plans. In general, your contributions were taxed when you made them and are not taxed by New Jersey when withdrawn. Interest, dividends, rollovers from tax-free pension plans, and earnings credited to an IRA are taxable when withdrawn.

Distributions from an IRA are most commonly taken in a lump sum or withdrawn over a period of years. When you receive a lump sum of the entire balance in a traditional IRA account, you must report the amount not previously taxed. You must include the taxable portion of the lump-sum distribution in your income in the year you receive it.

If you rollover a lump-sum distribution into another traditional IRA or other eligible plan, do not report the rollover on your New Jersey return if the rollover qualifies for deferral for federal tax purposes. The rollover must be made within the 60-day period after distribution.

When you make withdrawals from a traditional IRA over a period of years, the part of the annual distribution that represents earnings is taxable. For example, if the amounts not previously taxed in the IRA represent 33% of the total value of the IRA, then the taxable portion of the distribution is 33% of the total amount withdrawn in that year.

If you are filing a resident return, you must report both the taxable and excludable portions of the distribution on the separate lines provided on Form NJ-1040.

See Tax Topic Bulletin GIT-1&2 , Retirement Income, for more information.

View information on Roth IRAs, including information on conversions to Roth IRAs.

Last Updated: Monday, 12/04/23