NEW JERSEY- 403(b)

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  • FSC
    Junior Member
    • Jan 2008
    • 10

    #1

    NEW JERSEY- 403(b)

    Client inherited 403(b) from parent and rolled over to new IRA. Parent was already receiving RMD and client assumes deceased's carryover contribution basis. Because NJ does not allow deferral of employee's contribution amount in the year made, distributions must be adjusted so that the contribution basis portion of the distribution is not double taxed on the New Jersey income tax return.

    Question: Beneficiary does not forfeit or loss the ability to reduce NJ taxable distributions by the contribution basis amount? I know the contributions are not taxable on NJ if the taxpayer does a 403(b) rollover to another IRA. But what about a beneficiary rollover?
  • Greenbriar
    Senior Member
    • Jun 2007
    • 189

    #2
    Beneficiaries treated the same

    According to NJ Tech Bulletin GIT-1 Pensions and Annuities, "In general, pension and annuity income received by a survivor or beneficiary is treated the same way as regular pensions or annuity income. Thus, amounts received, whether in the form of periodic payments or in a lump sum, are taxable to the extent that they exceed the decedent's previously taxed contributions to the plan." So I interpret that to the mean that the contributor's basis passes to the beneficiary.

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