The Roth IRA in New Jersey

New Jersey generally taxes a traditional-IRA-to-Roth conversion to the extent the money has not already been taxed by New Jersey. That sounds ordinary. The state-specific part is not: the federal taxable amount is not necessarily the New Jersey taxable amount. A New Jersey resident may have state basis even when federal Form 8606 shows none, and the conversion can then recover that basis pro rata.

A narrow investment-income carveout can reduce the state amount further. GIT-1&2 expressly exempts IRA-distribution interest from New Jersey obligations or direct federal obligations held directly inside the IRA, and a qualifying New Jersey investment fund can pass through exempt interest. Applying that rule to a conversion is a strong inference from Treasury’s instruction to tax the amount that would have been taxable if withdrawn, not a conversion-specific ruling. An ordinary mutual fund does not qualify merely because it holds some exempt bonds; the qualified-investment-fund test and account records matter.

The same conversion can also change three different ledgers. It can add taxable pension and IRA income on the New Jersey return; it can push an older taxpayer across the hard $150,000 retirement-exclusion cutoff; and, under the broader PAS-1 measure used by two property-relief programs, it can count differently again. At death, a qualified inherited Roth can be excluded from income tax while New Jersey inheritance tax still depends on the beneficiary. Those are separate computations, not alternate descriptions of one number.

This guide therefore does not apply New Jersey’s 10.75% top bracket to the federal conversion and call the answer finished. It follows the state return in order: establish New Jersey basis, find the amount that belongs on line 20a, test the retirement exclusion, then apply the graduated schedule. The complete 2026 NJ-1040 booklet is not yet published as of August 13, 2026, so references to line 20 and Worksheet C use the latest published 2025 return architecture together with the January 2026 GIT-1&2 bulletin and current Division guidance.

New Jersey Roth IRA report card

The symbols summarize planning friction—not investment merit. Read each row's caveat before acting.

Signal	Issue	New Jersey rule
	Conversion taxed?	Generally the part New Jersey has not already taxed, after any narrow exempt-obligation carveout. The current published 2025 NJ-1040 Worksheet C carries unrecovered New Jersey IRA contributions into the conversion calculation.
	Conversion rate	Graduated 1.4%–10.75% ordinary-income rates; 10.75% applies only above $1 million of taxable income. No separate conversion surcharge was identified.
	Qualified Roth withdrawals	Not reported as New Jersey income when the federal Roth distribution is qualified. Keep records that establish qualified status.
	State early-distribution penalty	Unresolved—no conclusion. The reviewed authorities do not establish whether New Jersey has a separate early-distribution additional tax; source silence is not proof. Federal §72(t) and ordinary New Jersey income tax remain separate questions.
	Local income tax	Unresolved—no conclusion on a municipal or county individual income-tax layer for a Roth conversion. The reviewed source set is silent, and silence is not proof; verify the current locality before relying on a zero local layer.
	$150,000 exclusion cliff	For taxpayers age 62+ or disabled, line mechanics strongly support including eligible conversion income, but Treasury publishes no conversion-specific safe harbor. Once full-year total income exceeds $150,000, the exclusion disappears; the controlled MFJ $200-conversion example raises tax by $1,392.30 before return rounding.
	Social Security	Social Security and Railroad Retirement benefits are excluded. U.S. military pension and survivor benefits are excluded; federal civil-service pensions are not categorically exempt.
	Roth contributions going in	New Jersey gives no IRA-contribution deduction. Traditional IRA contributions can therefore create New Jersey basis; Roth contributions are made with already-taxed dollars.
	Property-relief cliffs	Stay NJ, Senior Freeze, and ANCHOR use different income measures and thresholds. A conversion can reduce or eliminate benefits even when its New Jersey-taxable portion is smaller.
	Conversion withholding	No mandatory New Jersey conversion-withholding percentage was identified. NJ-W-4P's $10 minimum applies to pension/annuity withholding; IRA-custodian operations still matter.
	NJBEST 529-to-Roth	Current New Jersey law does not conform cleanly to the federal rollover. Earnings and recovered prior deductions can be exposed; S3874/A3831 remained pending, not enacted, as of August 13, 2026.
	Owner creditor protection	N.J.S.A. 25:2-1(b) broadly protects qualifying owner IRAs without a stated dollar cap, subject to voidable-transfer, support/QDRO, and punitive-homicide exceptions.
	Inherited Roth protection	Ordinary-creditor protection is a statutory extrapolation from §408A. New Jersey bankruptcy cases involve inherited traditional IRAs and trial-level authority; no controlling inherited-Roth appellate holding was found.
	Estate / inheritance tax	New Jersey's estate tax ended for deaths on or after January 1, 2018, but inheritance tax remains and depends on beneficiary class. Class A/E can owe $0; Class C/D can owe tax even when the account passes outside probate.

New Jersey keeps its own IRA basis

New Jersey’s Gross Income Tax is built from defined income categories rather than federal adjusted gross income. Treasury puts the New Jersey-taxable part of an IRA conversion in the pension, annuity and IRA category: line 20a on the current published resident return. Previously taxed principal belongs on line 20b and is not included in total income. Copying the federal conversion amount can therefore tax the same contribution twice.

The most common source of the mismatch is a direct traditional IRA contribution. New Jersey does not allow the federal traditional-IRA deduction, so that contribution was already taxed by the state when earned. It becomes New Jersey basis even if it was deductible federally and never appeared as basis on Form 8606. Direct Roth IRA contributions are also nondeductible, making the two IRA types state-neutral on the contribution side. Employee 403(b) and §457 deferrals generally remain in New Jersey wages under current Division guidance. Post-1983 employee 401(k) deferrals generally received New Jersey’s special wage exclusion, however; a tax-free rollover of those dollars to a traditional IRA usually brings no New Jersey basis with it. The later Roth conversion can expose both that principal and its earnings.

Authority: New Jersey Division of Taxation, GIT-1&2 (January 2026), Worksheet C; Division guidance on Roth IRAs, Wages, and Exemptions and Deductions; N.J.S.A. §54A:5-1(j). Current Division guidance located does not expressly isolate designated-Roth 401(k) deferrals, so this guide does not infer their treatment from the general 401(k) statement.

Worksheet C spreads basis across the distribution

New Jersey does not let a partial conversion cherry-pick previously taxed principal. Under Worksheet C in the latest published 2025 NJ-1040 architecture, first determine total IRA value: the December 31 balance, including timely January 1 through April 15 following-year contributions designated for that tax year, plus the year’s distributions. Tax-free rollovers are excluded from the distribution line. Subtract unrecovered New Jersey contributions, divide the untaxed remainder by total value, and multiply that ratio by the year’s distributions. The balance is recovered basis.

A taxpayer can keep a separate worksheet for each IRA or combine several IRAs on one worksheet, but the election has a recordkeeping consequence: the taxpayer must retain the worksheet and the contribution history. It is not filed with the return. Federal Form 8606 cannot reconstruct New Jersey contributions that were deductible federally, and a custodian’s Form 1099-R does not know the state ledger.

View figure data as a table

Step	Amount	Result
Dec. 31 IRA value after conversion	$60,000	Value remaining
Only taxable-year distribution	$40,000	Roth conversion
2025 NJ-1040 Worksheet C total value	$100,000	$60,000 + $40,000
Unrecovered NJ contributions	$30,000	NJ basis
Untaxed balance	$70,000	70% taxable ratio
Roth conversion	$40,000	Distribution tested
NJ taxable portion (line 20a)	$28,000	$40,000 × 70%
NJ excludable basis (line 20b)	$12,000	$40,000 − $28,000
Basis carried forward	$18,000	$30,000 − $12,000

Take a $100,000 traditional IRA containing $30,000 of unrecovered New Jersey basis. Convert $40,000 and leave $60,000 at year-end. The untaxed share is $70,000 divided by $100,000, or 70%. New Jersey line 20a receives $28,000; line 20b receives $12,000 of previously taxed principal; and $18,000 of basis remains for later distributions. The workbook reproduces every step and lets the user change the balance, basis and conversion instead of treating 70% as a reusable assumption.

Authority: GIT-1&2 (January 2026), Worksheet C; 2025 NJ-1040 instructions, lines 20a and 20b. Arithmetic independently recomputed: ($100,000 − $30,000) ÷ $100,000 × $40,000 = $28,000 taxable; $12,000 basis recovered.

A conversion can qualify for the retirement exclusion — then erase it

A taxable conversion reported on line 20a can enter New Jersey’s pension and retirement exclusion when the converter is at least 62, or is disabled under Social Security guidelines, on December 31 and full-year total income is no more than $150,000. This is a strong reading of the current line mechanics, not a conversion-specific safe harbor: Treasury tells taxpayers to put taxable conversion income on line 20a, then permits qualifying line-20a IRA income in the exclusion. It does not publish a separate sentence saying that a Roth conversion qualifies.

At total income of $100,000 or less, the maximum is $100,000 for married filing jointly, $50,000 married filing separately, and $75,000 for single, head of household or qualifying widow or widower. From $100,001 through $125,000, the exclusion becomes 50% of taxable pension and IRA income for a joint return, 25% for married filing separately, and 37.5% for the other statuses. From $125,001 through $150,000, those shares halve to 25%, 12.5% and 18.75%. Above $150,000, the exclusion is zero. The percentages apply to taxable pension and IRA income, not to the headline maximum.

View figure data as a table

Controlled MFJ scenario	No conversion	$200 conversion	Change
Total income	$149,900	$150,100	+$200
Pension exclusion	$25,000	$0	−$25,000
Taxable income	$122,900	$148,100	+$25,200
Calculated NJ tax	$4,015.225	$5,407.525	+$1,392.30

That last boundary is a cliff, not a phaseout. In a controlled married-filing-jointly example, both spouses qualify, existing taxable pension and IRA income is $100,000, other New Jersey income is $49,900, and the return has only two $1,000 personal exemptions. Without a conversion, total income is $149,900 and the 25% tier excludes $25,000. Add a $200 fully New-Jersey-taxable conversion: total income becomes $150,100 and the entire $25,000 exclusion disappears. For this controlled MFJ case, applying the official joint schedule moves tax from $4,015.23 to $5,407.53, a $1,392.30 increase before whole-dollar return rounding.

The conversion itself did not create $1,392.30 of ordinary marginal-rate tax. It removed an exclusion. Basis can change the outcome because line 20b previously taxed principal does not enter total income, and spouses must be tested separately when only one satisfies the age or disability condition. A planner that asks only for federal taxable income cannot price this boundary correctly.

Authority: N.J.S.A. §54A:6-10(b); P.L. 2021, c.129; Division of Taxation, Retirement Income Exclusions; GIT-1&2 (January 2026); current 2020-and-after rate schedules. Controlled MFJ calculation independently reproduced in 36 assertion checks.

The state rate is graduated, not 10.75%

New Jersey’s individual schedule runs from 1.4% to 10.75%. The 10.75% rate applies only to taxable income above $1 million; it is not a flat conversion rate or a conversion surcharge. For single and married-filing-separately returns, the marginal bands rise through 1.4%, 1.75%, 3.5%, 5.525%, 6.37%, 8.97% and 10.75%. Joint, head-of-household and qualifying-widow returns add a 2.45% band and use wider lower brackets, but converge at 6.37% above $150,000, 8.97% above $500,000 and 10.75% above $1 million.

That is why the site’s general conversion tools now mark New Jersey as not modeled instead of applying the top bracket. The exact state amount needs New Jersey basis, filing status, other state income, age or disability status and available exclusion. Losses from a capital, business or other New Jersey income category generally cannot cross categories to offset pension and IRA conversion income.

Authority: N.J.S.A. §§54A:2-1 and 54A:5-2; Division of Taxation, current individual rate schedules and Common Filing Mistakes. The $6,370 example keeps both endpoints within the single-filer 6.37% band.

Withholding and estimated tax are separate decisions

No mandatory New Jersey conversion-withholding percentage was established in the official materials reviewed. Treasury suggests that IRA owners may consider voluntary withholding, but Form NJ-W-4P is titled for pension and annuity payments and elects a fixed whole-dollar amount of at least $10 from each such payment. Its instructions do not expressly cover IRA conversions. Confirm the available form and whether the custodian supports state withholding on a trustee-to-trustee conversion; do not assume NJ-W-4P will be accepted. If money is withheld from the IRA, it does not reach the Roth and remains a distribution for federal analysis.

Estimated payments generally become necessary when expected New Jersey tax due after withholding and credits exceeds $400. The underpayment target is the lesser of 80% of current-year tax or 100% of prior-year tax, provided the prior return covered 12 months; current New Jersey guidance does not add the federal-style 110% high-income tier. Form NJ-2210 supplies annualized-income and actual-period methods when a conversion arrives unevenly during the year.

For 2026, a new estimate obligation arising after September 1 is due January 15, 2027. That installment can be skipped if the 2026 return is filed and its entire balance paid by February 15, 2027. Earlier changes use the next published installment date. A late conversion does not erase underpayments from quarters in which estimates were already required.

Authority: N.J.S.A. §54A:9-6; GIT-8 (January 2026); 2026 NJ-1040-ES; 2025 NJ-2210; Form NJ-W-4P; GIT-1&2 (January 2026). Recheck annual return line numbers when the 2026 NJ-1040 is published.

Once qualified, the Roth withdrawal leaves the New Jersey return

A federally qualified Roth IRA distribution is excluded from New Jersey income and is not reported on the state return. The federal five-tax-year rule must be satisfied along with a qualifying event: age 59½, death, disability or the qualified first-time-homebuyer rule. New Jersey does not impose a second qualification clock. Social Security, Railroad Retirement, U.S. military pensions and U.S. military survivor benefit payments are also excluded from New Jersey income; ordinary public and private pensions generally enter the state computation before any available retirement exclusion.

The clean qualified-distribution rule should not be carried into the property-benefit or inheritance-tax ledgers. PAS-1 can ask for Roth receipts under its own basis-limited definition, and a New Jersey resident’s death can expose a beneficiary’s share to inheritance tax even when the inherited Roth distribution is qualified and income-tax-free. The next sections keep those ledgers apart.

Authority: Division of Taxation, Roth IRAs and Retirement Income; N.J.S.A. §§54A:6-2 and 54A:6-3; IRC §408A(d).

One application, two income systems, three property-relief answers

New Jersey puts Stay NJ, Senior Freeze, and ANCHOR on one PAS-1 application, but it does not give all three programs one income definition. Stay NJ and Senior Freeze use the broader PAS-1 receipts measure. ANCHOR uses New Jersey gross income on line 29 of the 2025 NJ-1040. A conversion plan therefore needs two columns: what PAS-1 counts, and what reaches line 29 after New Jersey’s own basis and retirement-income rules. Treating either column as a substitute for the other can misprice thousands of dollars of relief.

PAS-1 starts broadly. It reaches NJ-1040 income, tax-exempt interest, federal Social Security, excluded retirement income, and Roth IRA distributions or rollovers even when New Jersey does not tax them. Yet the addback is basis-limited: Treasury expressly tells applicants to leave out previously taxed contributions. Suppose a full $100,000 traditional-to-Roth conversion contains $40,000 of documented New Jersey basis and $60,000 of earnings or other money not previously taxed by New Jersey. Under those facts, the PAS-1 Roth-rollover amount is $60,000, not the gross $100,000. Losses in another PAS category do not offset it. That basis limit is the difference between a receipts test and a gross-conversion rule; New Jersey has the former, not the latter.

Stay NJ: the budget replaced the booklet’s provisional ceiling

For the tax-year-2025 application, the FY2027 Appropriations Act signed June 30, 2026 controls. The annualized maximum is $6,500 from $0 through $100,000 of PAS income, $5,000 from $100,000.01 through $150,000, $4,000 from $150,000.01 through $200,000, and $0 above $200,000. The pre-budget PAS-1 booklet’s $500,000 figure was provisional and is superseded. The applicant or spouse must have been 65 or older during 2025 and must have owned and occupied the eligible home for all 12 months; renters and mobile-home owners do not qualify. The headline maxima can also be reduced because combined property-relief benefits cannot exceed property tax paid.

Those tiers make the marginal cost lumpy. Moving from $100,000 to $100,000.01 cuts the stated maximum by $1,500. Crossing $150,000 costs another $1,000; crossing $200,000 costs the remaining $4,000. Those are maximum-benefit changes, not conversion tax rates, and the actual loss can be smaller under the property-tax-paid cap. Still, they belong in the conversion budget before the trade is placed.

Senior Freeze and ANCHOR run on different rails

Senior Freeze reimburses eligible growth in property tax above an established base year. The current test requires income no higher than $168,268 in 2024 and $172,475 in 2025, plus the age or disability and ownership rules; the home generally must have been owned and occupied since December 31, 2022. A prior recipient who exceeds the current-year limit receives no reimbursement for that year but may retain the base year once. A later second over-limit year forces a new base year on re-entry. Because the reimbursement equals the claimant’s own current tax minus base-year tax, there is no honest universal dollar-loss example.

ANCHOR is the counterexample to PAS-1. It uses line 29 of the 2025 NJ-1040. A homeowner receives $1,500 at line-29 income through $150,000 and $1,000 from $150,001 through $250,000; above $250,000 the stated benefit is $0. A renter receives $450 when under 65 or $700 when 65 or older, but only through $150,000. The $700 already includes the senior increment; do not add another $250. A separate property-tax credit of up to $50 applies only in specified age-65 cases. Because line 29 is not PAS-1 receipts, a documented basis amount excluded from New Jersey income does not become ANCHOR income merely because it moved through a Roth conversion.

View figure data as a table

Program	Income lane	Threshold result	Conversion issue
Stay NJ	Countable PAS income	$6,500 max ≤$100k; $5,000 to $150k; $4,000 to $200k; $0 over $200k	Adds the nonbasis part of a Roth rollover
Senior Freeze	Program-specific annual income	2025 application ceiling: $172,475	Over the ceiling means no current reimbursement; a qualifying repeat claimant can retain the base year once
ANCHOR homeowner	NJ-1040 line 29 base	$1,500 ≤$150k; $1,000 to $250k; $0 over $250k	A taxable conversion can cross the $150,000 or $250,000 edge

The 2025 PAS-1 deadline is November 2, 2026. Filing before a late-year conversion does not freeze the facts: Treasury says later verification that raises income above a program limit can require repayment. Model the entire calendar year, not the filing date.

Authority: FY2027 Appropriations Act; 2025 PAS-1 and current Stay NJ page; Division of Taxation PAS income clarification (updated February 11, 2026); Senior Freeze eligibility page; 2025 NJ-1040 line 29; ANCHOR benefit calculation; Property Tax Relief FAQ (updated August 10, 2026)

NJSave and Medicaid: do not borrow PAS-1’s answer

The 2026 PAAD income ceiling is strictly less than $54,943 for a single applicant and strictly less than $62,390 for a married couple. PAAD provides $5 generic and $7 brand-name prescription copays plus Part D help. Senior Gold occupies the next $10,000 band: $54,943–$64,943 single and $62,390–$72,390 married, with a materially less generous cost structure. PAAD-linked Lifeline pays $225 a year, and HAAAD can reimburse up to $500 for one hearing aid or $1,000 for two. Crossing one income line can therefore change several benefits at once.

N.J.A.C. 10:167 counts taxable and nontaxable distributions from traditional, SIMPLE, Roth, and education IRAs. It separately excludes a rollover from one tax-deferred instrument to another. Published NJSave guidance does not expressly say which clause controls a traditional-to-Roth conversion. PAS-1’s explicit Roth-rollover addback does not answer that separate program. The stakes justify restraint: if actual annual income exceeds PAAD’s standard, eligibility can be lost for the full calendar year and prescription and Lifeline benefits paid from January 1 can become repayable. Near a ceiling, obtain a written NJSave determination before converting.

Medicaid long-term care is narrower and more fact-dependent still. Effective January 1, 2026, the MLTSS gross monthly income cap is $2,982. The one-person Medicaid Only resource standard is $2,000; in the institutional-spouse analysis, the community-spouse resource allowance runs from $32,532 to $162,660. New Jersey’s rule and Mistrick include an accessible IRA owned by either spouse in that couple assessment. A qualified income trust may address income above the cap, but it does not make an accessible IRA vanish as a resource. These are institutional/MLTSS rules, not a universal statement about every Medicaid category.

Authority: N.J.A.C. 10:167-6.2; 2026 PAAD, Senior Gold, Lifeline, and HAAAD program pages; DMAHS Medicaid Communications 26-01 and 26-05; N.J.A.C. 10:71-4.8; Mistrick v. DMAHS, 154 N.J. 158 (1998)

A completed move changes the conversion; a second address does not

New Jersey has two independent roads to resident status. The first is domicile: the permanent home a person intends to return to. The second is statutory residence: a person domiciled elsewhere still becomes a resident by maintaining a permanent New Jersey home and spending more than 183 days in the State. Exactly 183 days does not satisfy that second test, but the permanent-home element is separate and ownership is unnecessary. Either road exposes worldwide income, including the New Jersey-taxable portion of a conversion.

Domicile continues until a new permanent home is actually established and New Jersey domicile is abandoned. A closing, mailing-address change, or long absence does not do that alone. Treasury weighs stated intent against objective facts. Three evidence buckets make the inquiry easier to audit:

• Home and presence. Document the new permanent home, the status of any continuing New Jersey home, and actual days and travel.
• Civic and financial ties. Voter registration, driver’s license, vehicle records, federal-return address, and banking should tell a consistent story.
• Family and benefits. Family location and continued participation in New Jersey property-relief programs also bear on intent.

This is evidence organization, not a point system. A continuing New Jersey domiciliary has a separate, narrow escape only by meeting all three statutory conditions: no permanent New Jersey home, a permanent home outside the State, and no more than 30 New Jersey days. Missing one leaves full-year resident status intact.

In the move year, the distribution date controls

A genuine domicile change creates resident and nonresident periods. New Jersey has no special part-year form: NJ-1040 reports income received during the resident period. NJ-1040NR is generally added when New Jersey-source income exists during the nonresident period, or may be filed to recover New Jersey withholding or estimated payments. A nonresident-period IRA conversion is not New Jersey-source retirement income and does not by itself create nonresident liability.

Treasury says a part-year return includes amounts received while resident, and its conversion guidance treats the conversion as an IRA distribution. Read together, those rules make the custodian’s actual distribution/conversion date decisive: a conversion completed during New Jersey residence is included in full to the extent New Jersey-taxable; one completed after residence and domicile genuinely end falls outside the resident-period return. New Jersey does not spread one conversion across the year by days. This is a strong application of two express rules, not a conversion-specific moving example published by Treasury, so an initiated-but-unsettled instruction should not be treated as completed.

Part-year mechanics keep two other clocks. The filing threshold looks to full-year worldwide gross income: $10,000 for single or married filing separately, and $20,000 for married filing jointly, head of household, or qualifying widow or widower, even though NJ-1040 includes only resident-period income. If there was no resident-period income and no New Jersey-source income during the nonresident period, GIT-6 says no return is required; filing solely for a refund is a separate case. Exemptions and specified credits use resident months, with a month counted when residency lasted at least 15 days; deductions generally follow resident-period amounts. The underlying pension exclusion still requires age 62 or Social Security disability and full-year total income of $150,000 or less. Its maximums are month-prorated in the $0–$100,000 full-year-income tier, but the percentage tiers above $100,000 through $150,000 apply to qualifying resident-period retirement income without that month fraction.

The federal shield begins only after New Jersey residency ends

Once the individual is neither a New Jersey resident nor domiciliary, 4 U.S.C. §114 bars New Jersey from taxing retirement income from an individual retirement plan. That express IRA category is not limited to periodic payments; it reaches a lump-sum Roth conversion because the taxable event is a distribution from the traditional IRA. New Jersey independently says a nonresident’s pension, annuity, and IRA income is not subject to its Income Tax. The custodian’s location does not turn the distribution into New Jersey-source income.

The $0 is only New Jersey’s answer; the destination state may tax the conversion. Section 114 also does not settle a residency dispute. A person whom New Jersey still properly treats as resident cannot invoke the nonresident shield, and a true dual resident may instead need the resident credit rules. New arrivals get one favorable recordkeeping rule: New Jersey treats pre-move IRA and Roth contributions as though made while resident, so documented principal is not lost merely because it predates the move. That does not turn pre-tax employer-plan rollover money or earnings into basis.

Authority: N.J.S.A. 54A:1-2(m); GIT-6 (May 2026); January 2026 GIT-1&2; 2025 NJ-1040 and NJ-1040NR instructions; 4 U.S.C. §114(a), (b)(1)(E); IRC §7701(a)(37); Division of Taxation Retirement Income guidance

RetireReady automates payroll, not Roth eligibility

RetireReady NJ is live, not proposed. The default account is a Roth IRA funded at 3% of gross taxable wages, with a one-percentage-point increase each January until 10%. A saver can elect a whole percentage from 1% through 100%, choose 0% to opt out, or direct the program to establish a traditional IRA. The first 30 days of default contributions sit in the Capital Preservation Fund; after that, money moves to the target-date fund closest to age 65 unless the saver chooses another option. Treasury reported approximately 30,000 savers and approximately $25 million in the program at its two-year mark in July 2026; those rounded totals are scale measures, not an average account balance or performance result.

The automation has a federal blind spot. The April 2026 Program Description makes the saver responsible for Roth eligibility and says the program’s dollar stop operates without regard to Roth income limits. It cannot see household MAGI, a spouse’s income, or IRA contributions made elsewhere. Worse, RetireReady’s live contribution page, updated May 15, 2026, incorrectly presents the full $7,500/$8,600 as available below the upper phaseout ceilings and omits married filing separately. IRS Notice 2025-67 controls.

The annual IRA limit is $7,500 under age 50 or $8,600 at 50 or older, capped again by compensation and shared across traditional and Roth IRAs. Example one: an under-50 single filer with $160,000 MAGI, at least $7,500 of compensation, and no other IRA contribution is $7,000 into a $15,000 phaseout. The reduction is $7,500 × 7/15 = $3,500, leaving $4,000 of Roth contribution room, not the full $7,500 shown by the state table. Example two: an otherwise identical under-50 joint filer at $247,000 MAGI is halfway through the $10,000 joint phaseout, leaving $3,750. A traditional-IRA election, opt-out, or timely recharacterization can be available, but payroll default is not an eligibility determination.

Fees and employer enforcement are both in transition

The April 2026 disclosure shows a 0.75% program-administration component plus fund expenses: 0.82% total for capital preservation, 0.83% for the target-date default, and 0.765% to 1.80% across the other listed choices. A constant $10,000 target-date balance therefore carries about $83 a year of asset-based fees before market movement. Event fees include $50 for an outbound rollover, $10 a year for paper statements, and $5 for a paper check. P.L.2025, c.379 changed the statutory administrative-fee ceiling to $26 per account plus 0.25% of the balance: $51 at $10,000, versus $75 for the disclosed 0.75% administration component alone. Board implementation remained unresolved in the reviewed public record, so report both dated facts; do not call the current disclosure unlawful.

As of August 13, 2026, enforcement still reaches private New Jersey employers with 25 or more employees, at least two years in business, and no qualifying plan. P.L.2025, c.379 enacted a lower 10-employee threshold, but the State has not announced a registration or penalty date for employers with 10–24 employees; projected early-September outreach is not a deadline. The enacted enrollment schedule is a warning in year one, $100 in year two, $250 per unenrolled employee in years three and four, and $500 per employee from year five. Failure to transmit collected contributions carries $2,500 for a first violation and $5,000 thereafter. Those are employer penalties, not saver fees.

Authority: RetireReady NJ Program Description (April 2026); P.L.2025, c.379; RetireReady Board and employer pages; Treasury release dated and last updated July 22, 2026; IRS Notice 2025-67

NJBEST can process the rollover; New Jersey still calls it nonqualified

New Jersey allows up to a $10,000 annual deduction for NJBEST contributions when New Jersey gross income is $200,000 or less. It is a deduction, not a credit, and another state’s 529 does not qualify. The edge is exact: at $200,000, up to $10,000 of current-year NJBEST contributions can qualify; at $200,001, the deduction is $0. Because the gate is New Jersey gross income, a taxable conversion can consume it.

NJBEST’s administrator also has a working direct 529-to-Roth form. Federal mechanics require a trustee-to-trustee transfer into an existing Roth IRA owned by the 529 beneficiary, a 529 account at least 15 years old, exclusion of contributions and attributable earnings from the preceding five years, a $35,000 lifetime beneficiary cap, and room under the beneficiary’s annual IRA limit. The form proves the transaction can be processed. It does not prove New Jersey tax conformity.

Current New Jersey law treats the rollover as a nonqualified NJBEST withdrawal. Account earnings enter New Jersey gross income, and the portion attributable to contributions previously deducted by New Jersey is recaptured. If an entire $10,000 account consists of $8,000 of contributions, $5,000 of which produced prior New Jersey deductions, plus $2,000 of earnings, current-law inclusion is $7,000: $5,000 of recapture plus $2,000 of earnings. The remaining $3,000 of nondeducted principal is not included. That example assumes a full-account rollover; a partial rollover requires the statute’s allocation method.

S3874 and A3831 would make a qualifying NJBEST-to-Roth rollover tax-exempt and apply the change retroactively to tax years beginning January 1, 2024. As of August 13, 2026, both remain pending; S3874 is still marked as introduced. Federal tax-free treatment and an operational state-plan form do not enact a state exclusion. Plan under current nonconformity, then recheck the bills before filing or publishing a later-year guide.

Authority: N.J.S.A. 54A:3-12 and 54A:6-25; NJBEST 529-to-Roth IRA Rollover Form ESNJD-ROR (November 12, 2025); IRC §529(c)(3)(E); S3874/A3831, 222nd Legislature, pending as of August 13, 2026

New Jersey’s IRA shield has no dollar cap — but it has important boundaries

New Jersey protects a Roth IRA through the definition of a qualifying trust. N.J.S.A. 25:2-1(b) expressly reaches arrangements described in IRC §§408 and 408A, so the provision covers traditional and Roth IRAs. Property held in the qualifying trust, and distributions from it regardless of the distribution plan elected, are exempt from creditor claims. The subsection states no dollar ceiling and does not condition the shield on what the owner needs for support. Account size alone therefore does not narrow the state shield, although every qualification and statutory exception still applies. The operative citation is subsection (b); subsection (a) states the general rule to which the exemption is the exception.

Uncapped does not mean absolute. The statute withdraws protection in three enumerated settings. First, it preserves remedies against a preferential or voidable transfer under New Jersey’s Uniform Voidable Transactions Act or other state or federal law. Second, it permits claims under child-support or spousal-support orders and an alternate payee’s claim under a qualified domestic relations order. The alternate payee’s share remains protected from that alternate payee’s own creditors. Third, it permits collection of punitive damages awarded in a civil action arising from manslaughter or murder. These are exceptions to the shield, not separate taxes or account-distribution rules.

The first exception matters before trouble reaches a courtroom. In Gilchinsky v. National Westminster Bank N.J., the New Jersey Supreme Court described IRA immunity as qualified rather than absolute and examined the badges of fraud surrounding transfers made with an existing creditor in view. The case predates the 2021 statutory update from fraudulent-transfer terminology to the Uniform Voidable Transactions Act, but the current text preserves the same anti-avoidance principle. There is no statutory safe waiting period that turns last-minute sheltering into protected planning. Timing, insolvency, retained control and the surrounding facts can all matter.

The statute expressly names distributions, but the protection is not self-executing forever. N.J.S.A. 25:2-1(b) names distributions from the trust, yet no controlling New Jersey appellate opinion located through August 13, 2026 establishes how long cash remains protected after receipt, how it must be traced, or what happens after it is commingled with wages or other deposits. A segregated account and a clean paper trail improve the argument; they do not create a holding that does not exist. Do not treat an ordinary checking-account balance as permanently immune merely because some dollars once came from a Roth.

Authority: N.J.S.A. 25:2-1(b), (b)(1)–(3), as amended by P.L. 2021, c.92; New Jersey Uniform Voidable Transactions Act; Gilchinsky v. National Westminster Bank N.J., 159 N.J. 463 (1999).

In bankruptcy, exclusion comes before the federal $1,711,975 backstop

The bankruptcy result turns on vocabulary. In In re Yuhas, 104 F.3d 612 (3d Cir. 1997), the Third Circuit held that N.J.S.A. 25:2-1 supplies an enforceable transfer restriction under 11 U.S.C. §541(c)(2). A qualifying New Jersey IRA is therefore excluded from the bankruptcy estate, rather than first entering the estate and then being claimed as exempt. Yuhas identified five requirements and assumed several uncontested elements. The account still must be a trust, contain the debtor’s beneficial interest, remain qualified under IRC §408, and satisfy the enforceable-restriction elements. A broken or mis-titled account should not be promised Yuhas treatment.

That exclusion analysis is why the federal IRA cap is not New Jersey’s ordinary ceiling. If an exemption route becomes relevant, 11 U.S.C. §522(n) supplies an aggregate $1,711,975 limit for covered §408 and §408A assets in cases filed April 1, 2025 through March 31, 2028, subject to an interests-of-justice increase. The limit disregards amounts attributable to the employer-plan rollover provisions Congress actually enumerated — §§402(c), 402(e)(6), 403(a)(4), 403(a)(5) and 403(b)(8) — together with their earnings.

That tracing exception is narrower than the phrase rollover money. It does not list an ordinary IRA-to-IRA rollover under §408(d)(3), and it does not list a Roth conversion under §408A(e). Those transactions can preserve tax status without becoming amounts disregarded from the separate §522(n) cap. Keep the old plan statements, rollover confirmations and account-level earnings records that prove an enumerated employer-plan source. In a New Jersey filing, counsel should first ask whether Yuhas keeps the qualifying account out of the estate; the federal figure is a backstop, not a substitute for that threshold question.

Authority: In re Yuhas, 104 F.3d 612 (3d Cir. 1997); 11 U.S.C. §§541(c)(2), 522(b)(4), 522(n); Judicial Conference adjustment effective April 1, 2025.

Inherited IRAs have strong trial-court support, not a controlling inherited-Roth holding

Clark v. Rameker, 573 U.S. 122 (2014), held that an inherited IRA is not federally exempt as “retirement funds.” It did not decide New Jersey law. Two published Bankruptcy Court decisions in the District of New Jersey then applied N.J.S.A. 25:2-1 to inherited traditional IRAs. In re Andolino, 525 B.R. 588 (Bankr. D.N.J. 2015), and In re Norris, 550 B.R. 271 (Bankr. D.N.J. 2016), treated a federally qualified inherited IRA as a qualifying trust and excluded it under §541(c)(2).

Those are meaningful, fact-matched bankruptcy holdings, but they are not a post-Clark Third Circuit decision or a controlling New Jersey appellate decision. Both involved inherited traditional arrangements under §408. Protection for an inherited Roth rests on the current statute’s parallel, express reference to §408A, not on a case that actually adjudicated an inherited Roth. Account qualification and correct inherited-account titling remain essential, and Andolino’s pre-SECURE Act payout discussion should not be borrowed for today’s distribution schedule.

Outside bankruptcy, the statutory case is also strong but one step more inferential. Section 25:2-1 protects property in any qualifying §408 or §408A trust without limiting the protection to the original owner, and Andolino and Norris read that wording to cover inherited accounts. No controlling New Jersey appellate judgment-creditor case specifically applying it to an inherited IRA was located. The careful conclusion is therefore: published D.N.J. cases support inherited-traditional-IRA protection; the text supports inherited Roths and ordinary-creditor protection; neither extension has a controlling appellate inherited-Roth ruling behind it.

Authority: N.J.S.A. 25:2-1(b); Clark v. Rameker, 573 U.S. 122 (2014); In re Andolino, 525 B.R. 588 (Bankr. D.N.J. 2015); In re Norris, 550 B.R. 271 (Bankr. D.N.J. 2016).

Divorce uses an IRA transfer, not a do-it-yourself withdrawal

New Jersey may equitably distribute the marital portion of an IRA; classification and valuation remain fact-specific. The federal tax mechanism is IRC §408(d)(6): a transfer of an IRA interest to a spouse or former spouse under a divorce or separation instrument. A cash withdrawal ordered by a court is not the same transaction and can create income tax and an additional federal tax. Although New Jersey’s creditor statute refers to an alternate payee under a QDRO, an IRA is not an ERISA plan and a QDRO should not be described as the federal instrument required to divide the IRA itself.

The beneficiary form needs separate attention. N.J.S.A. 3B:3-14 generally revokes covered revocable dispositions to a former spouse at divorce, including retirement or similar benefit instruments, but preserves contrary governing-instrument terms, court orders and marital-property contracts. Federal preemption can govern some benefits. The practical rule is to update the IRA beneficiary designation directly instead of relying on automatic revocation or on a divorce decree that the custodian has not implemented.

Authority: N.J.S.A. 2A:34-23(h)(1); N.J.S.A. 3B:3-14; IRC §408(d)(6); In re Estate of Michael D. Jones, 259 N.J. 584 (2025) (governing-instrument principle; savings-bond case, not an IRA holding).

At death, answer four different questions in order

A beneficiary designation does not produce one universal answer called tax-free. New Jersey income tax, New Jersey inheritance tax, probate administration and the institution’s tax-waiver release rules are separate ledgers. A Roth can be income-tax-free, inheritance-taxable, outside probate and temporarily restricted at the institution at the same time.

Question 1: Is the inherited Roth distribution subject to New Jersey income tax?

A distribution after the owner’s death satisfies the federal qualifying-event requirement, but death does not erase the Roth’s five-tax-year clock. When that waiting period — measured from the first tax year of the owner’s first Roth IRA contribution — has been satisfied, the inherited distribution is federally qualified. New Jersey then excludes it from income, and current Division guidance says a qualified Roth distribution is not reported on the state return.

If the clock has not been satisfied, the distribution is nonqualified for New Jersey as it is federally. That calculation is separate from the date-of-death transfer, beneficiary class and waiver paperwork. The beneficiary inherits the applicable Roth seasoning history; the clock is neither reset nor waived merely because the account changed hands.

Authority: New Jersey Division of Taxation, GIT-1&2 / Retirement Income (January 2026); IRC §408A(d).

Question 2: Does New Jersey inheritance tax reach this beneficiary’s share?

New Jersey has imposed no estate tax for deaths on or after January 1, 2018. Its separate inheritance tax remains. For a New Jersey-resident decedent, the inheritance tax reaches New Jersey real and tangible property plus intangible personal property wherever located. An IRA is intangible property. For a nonresident decedent, the tax reaches only New Jersey real or tangible personal property; a New Jersey beneficiary does not pull a nonresident decedent’s IRA into the tax merely by living here. Decedent domicile, not beneficiary residence, controls the intangible-property reach.

View figure data as a table

Named beneficiary class	$100,000 share	$500,000 share	$1,000,000 share
Class A · adult child	$0	$0	$0
Class C · sibling	$8,250	$52,250	$107,250
Class D · friend	$15,000	$75,000	$153,000
Class E · qualifying charity	$0	$0	$0

The rates apply per beneficiary, not to one combined estate bucket. Each Class C beneficiary receives a separate $25,000 exemption. The remaining share is taxed at 11% through $1.1 million, then 13% through $1.4 million, 14% through $1.7 million and 16% above. Thus a sibling’s $100,000 share produces ($100,000 − $25,000) × 11% = $8,250. A step-grandchild is not currently Class A.

Class D has a cliff, not a $500 deduction. A share of $499 or less produces no tax. Once the share is $500 or more, the first dollar is taxed: 15% through $700,000 and 16% above. A friend’s $100,000 share therefore produces $15,000; a $1 million share produces $700,000 × 15% plus $300,000 × 16% = $153,000. These examples assume a resident decedent and use the amount passing to one beneficiary.

Authority: New Jersey Division of Taxation, Estate and Inheritance Tax Rates; Inheritance Tax overview; Transfer Inheritance Tax Beneficiary Classes; IT-Rate Inheritance Tax Calculator.

Question 3: Does the beneficiary designation avoid probate?

A valid IRA beneficiary designation generally sends the account directly to the named beneficiary rather than through the probate estate. It does not create an inheritance-tax exemption. New Jersey inheritance-tax reporting reaches transfers by will, intestacy, trust or operation of law, and Treasury specifically lists IRAs among transfers taking effect at or after death. A Class C or D beneficiary can therefore receive a qualified, income-tax-free Roth outside probate and still owe inheritance tax on the transfer.

Authority: New Jersey Division of Taxation, inheritance-tax definitions and Form IT-R instructions.

Question 4: What may the institution release before a tax waiver arrives?

A bank or other financial institution may require New Jersey tax-waiver authority before releasing an IRA. The answer changes with the wrapper, custodian and destination. An IRA in annuity form administered by an insurance company does not require a waiver. A brokerage IRA can be retitled or transferred into an inherited IRA within the same institution without a waiver because the institution retains control, but that is not an unrestricted release and notice obligations remain. A transfer to another institution generally requires the applicable waiver or release authority.

Two nonresident rules prevent overfiling. No waiver is required for assets held by a nonresident custodian, whether the decedent was resident or nonresident. Intangible assets of a nonresident decedent also do not require a waiver. No-waiver status does not itself decide whether a return, notice or tax is due on some other property.

The familiar 50% rule needs careful wording. General IT-R guidance permits a financial institution to release up to 50% of an account’s date-of-death value to specified parties without a waiver. Current brokerage guidance instead describes the institution as retaining assets worth 50% of the date-of-death value and releasing the remaining current assets. If an account was worth $100,000 at death and is worth $200,000 now, the institution retains $50,000 and may release $150,000. The retained $50,000 is security for possible tax, not a 50% tax. If the account falls below the required retained value, the amount available can shrink to zero. The authorized recipients and account type still must fit the rule.

For an eligible Class A transfer, Form L-8 is a self-executing waiver for qualifying bank, brokerage and similar assets. The beneficiary files it with the institution, not the Division of Taxation, and a separate form may be needed for each institution. Eligibility depends on the current form’s beneficiary, account, trust, disclaimer and succession facts; being related to the decedent does not excuse those questions.

When a return and tax are required, both are due within eight months after death. Interest is 10% annually on direct tax or a portion left unpaid after that eight-month period; it does not run from the date of death during the timely window. A filing extension does not extend the payment deadline. For a payment made ten months after death, the ordinary late period is approximately two months, not ten.

Authority: N.J.S.A. 54:35-19; New Jersey Division of Taxation, Tax Waiver Requirements; Form L-8; Form IT-R instructions; Inheritance Tax Filing Requirements.

After the transfer, New Jersey preserves a separate basis ledger

If a pension, annuity or IRA was subject to New Jersey inheritance tax, its date-of-death value becomes the decedent’s previously taxed contribution for calculating New Jersey income on later retirement distributions. This prevents New Jersey from treating the same principal as taxable retirement income again. It is most important for an inherited traditional IRA or a Roth distribution that is not otherwise qualified. A fully qualified inherited Roth distribution is already excluded from New Jersey gross income and does not receive a second deduction.

This is a New Jersey previously-taxed-contribution rule, not a federal §1014 basis step-up. If the benefit was not subject to New Jersey inheritance tax, the beneficiary instead succeeds to the decedent’s remaining previously taxed New Jersey contributions. Keep the date-of-death valuation, inheritance-tax return, assessment, payment records and the decedent’s state contribution history. The custodian’s federal reporting will not reconstruct that New Jersey ledger.

Authority: New Jersey Division of Taxation, GIT-1&2 / Retirement Income guide.

Current law, proposals and dated guidance

New Jersey’s Roth rules are date-sensitive. A printed property-relief booklet was overtaken by the budget before applications were due. RetireReady’s employer threshold changed by statute before the new rollout dates were announced. The Legislature is considering changes to the retirement exclusion, NJBEST rollovers and inheritance tax, but none replaces current law as of August 13, 2026.

Pending bills also illustrate why summaries are not authority. S3595 would exclude federally defined required minimum distributions if enacted, but its explanatory statement still describes an age-72 start and a 50% federal penalty — both obsolete. A1259 would create a formula-based other-retirement-income exclusion for some part-time workers above the current $3,000 earned-income gate, but its part-time-worker illustration uses a historical $12 minimum wage and the statutory formula can still yield zero. A569 would broadly exclude listed retirement contributions, qualified withdrawals and IRA rollovers. None of these proposals changes a 2026 return unless enacted.

Authority: New Jersey Legislature bill text and status for S3689, A1611, S3874, A3831, S1531, A2991, A3545, S3858, S3595, A1259 and A569; P.L. 2025, c.379; Division of Taxation current forms page. Status checked 2026-08-13.

The New Jersey traps worth carrying forward

• The federal taxable amount is only a starting clue. Reconstruct New Jersey contributions and the latest published 2025 NJ-1040 Worksheet C before pricing a conversion.
• The 10.75% figure is a top bracket above $1 million, not a flat state rate. New Jersey basis, the graduated schedule and the retirement exclusion can each change the bill.
• The $150,000 retirement-exclusion line is a cliff. A small conversion can remove a much larger exclusion; the controlled MFJ $200 example adds $1,392.30 of New Jersey tax.
• PAS-1 is not NJ-1040. Stay NJ and Senior Freeze use a broader receipt measure, but PAS-1 expressly removes previously taxed Roth or IRA basis. Do not add the gross conversion automatically.
• The current budget beats the printed Stay NJ ceiling. The FY2027-funded TY2025 application stops at $200,000 even though the pre-budget booklet still shows $500,000.
• RetireReady does not see household MAGI or outside IRAs. Its live table also omits the 2026 federal phaseout floors; the saver remains responsible for eligibility and excess-contribution cleanup.
• Federal 529-to-Roth permission is not current New Jersey conformity. Pending bills do not change the present NJBEST result.
• Income tax, inheritance tax, probate and waiver are four questions. A named beneficiary can avoid probate and receive a qualified Roth income-tax-free, yet still owe inheritance tax by beneficiary class and face release paperwork.
• A bill synopsis, an old form and a live program disclosure can disagree. Label the date and authority instead of quietly choosing the friendliest number.

How this New Jersey guide was built

Research ran in five independent domains: conversion tax, programs, creditor and death protection, residency and moving, and a final current-news gap sweep. Each fact recorded the proposition, detail, authority, source URL, verbatim support and confidence; where the research source supplied one, the record also carries an applicable-year or as-of label. A second pass re-fetched every source without relying on the first researcher’s conclusion, recomputed each worked example, and classified the cell as confirmed, corrected or unverifiable.

The public dataset contains 103 facts: 82 confirmed as researched and 21 corrected before publication. 3 negative-authority findings were quarantined because the official materials reviewed could not prove a categorical statement. The cells are not in the public CSV or workbook and are not used as positive or negative factual conclusions. The early-distribution-tax and local-income-tax topics appear only as unresolved, silence-is-not-proof cautions in the report card; the third quarantined topic is omitted entirely. The page was checked against 29 state-specific claim guards: among other checks, 10.75% must travel with the $1 million bracket, 2025 NJ-1040 Worksheet C must carry its form vintage, the retirement exclusion must carry both gates, PAS-1 Roth language must preserve basis, and inherited-Roth protection must disclose the absence of a controlling appellate holding directly on that account.

The arithmetic has its own reproducible ledger. Thirty-six assertions recheck the $28,000 taxable / $12,000 basis 2025 NJ-1040 Worksheet C result, the controlled MFJ $1,392.30 exclusion cliff, the exact $6,243.25 pre-move conversion cost after testing a bona fide domicile change, the $6,370 versus $10,750 rate shortcut, the inheritance-tax examples and the Class D $500 cliff. The workbook exposes the calculations as formulas rather than frozen answers.

The dataset and workbook

The raw CSV is one row per publishable fact, including authority, source quote, confidence and independent verdict. The workbook adds three live models: a New Jersey basis, conversion and retirement-exclusion calculator; a property-relief exposure screen that keeps PAS-1 separate from NJ-1040 line 29; and an inheritance-tax and waiver-release calculator by beneficiary class. It also carries a fourteen-row planning dashboard that supplements the page report card, plus all-facts and source-audit sheets.

New Jersey Roth IRA questions

Does New Jersey tax a Roth conversion?

Generally, New Jersey taxes the state-untaxed share. State basis is recovered under the latest published 2025 NJ-1040 Worksheet C, then the taxable amount enters the graduated schedule; a narrow exempt-obligation carveout can apply when its documentation and investment tests are met. An eligible taxpayer age 62 or older, or disabled under Social Security guidelines, may use the retirement exclusion only while total income remains at or below $150,000.

Does New Jersey tax qualified Roth IRA withdrawals?

No. Once the federal five-year rule and a qualifying event are satisfied, New Jersey excludes the distribution from gross income and it is not reported on the state return.

Does a Roth conversion count for Stay NJ or Senior Freeze?

PAS-1 specifically includes Roth rollovers and distributions under its broader income measure, even when the state return excludes them, but it also removes previously taxed contributions. Use the nonbasis amount supported by the records rather than the gross conversion. ANCHOR uses NJ-1040 line 29 instead of PAS-1 income.

Is an inherited Roth tax-free in New Jersey?

A distribution after death is excluded from New Jersey income when the Roth five-year rule is satisfied. Separately, inheritance tax can apply to a New Jersey resident decedent’s Roth based on each beneficiary’s class and share. Class A and qualifying Class E beneficiaries are exempt; Class C and D can owe tax.

Does New Jersey protect a Roth IRA from creditors?

N.J.S.A. 25:2-1(b) gives a qualifying owner’s Roth broad protection with no stated dollar cap, subject to its transfer, support, QDRO and punitive-damages exceptions. Two New Jersey bankruptcy decisions protected inherited IRAs, but no controlling state appellate or Third Circuit decision directly resolving an inherited Roth was located.

Can a move eliminate New Jersey tax on a later conversion?

After a bona fide domicile change, New Jersey does not tax a nonresident’s qualifying lump-sum IRA retirement income, consistent with 4 U.S.C. §114. The move must be real, and part-year resident income remains reportable. The destination state and federal tax are separate.

Is a 529-to-Roth rollover qualified in New Jersey?

Not under current New Jersey law as of August 13, 2026. NJBEST earnings and prior state deductions can be exposed even when the rollover satisfies federal law. S3874 and A3831 would conform retroactively to TY2024, but remain pending.

Related reading

Continue with a neighboring-state comparison or the federal rule underneath the New Jersey result.

• Roth IRA in Pennsylvania — compare a neighboring state with different retirement-income treatment.
• Roth IRA in New York — compare the other major cross-Hudson residency path.
• Roth conversion rules — start with the federal conversion mechanics before layering on New Jersey basis.
• 529-to-Roth rollovers — understand the federal rollover before evaluating NJBEST nonconformity.
• Inherited Roth IRA rules — separate the federal five-year and income-tax rules from New Jersey inheritance tax and unsettled creditor law.
• Roth IRA vs. HSA — compare two tax-advantaged accounts without treating their state rules as interchangeable.