Sponsored by:
Senator ANTHONY M. BUCCO
District 25 (Morris and Somerset)
Senator ANTHONY R. BUCCO
District 25 (Morris and Somerset)
SYNOPSIS
Excludes certain federal employee Thrift Savings Fund contributions from gross income under the gross income tax.
CURRENT VERSION OF TEXT
As introduced.
An Act excluding certain federal employee contributions to the federal Thrift Savings Fund from gross income under the gross income tax, amending P.L.1983, c.571
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1983, c.571 (C.54A:6-21) is amended to read as follows:
2. Contributions to certain employee trusts. Gross income shall not include amounts contributed:
a. by an employer on behalf of and at the election of an employee to a trust which is part of a qualified cash or deferred arrangement which meets the requirements of [Section 401(k)] subsection (k) of section 401 of the [1954] federal Internal Revenue Code [, as amended] of 1986 (26 U.S.C. s.401); or
b. to the federal Thrift Savings Fund established pursuant to 5 U.S.C. s.8437 which meet the requirements of subsection (j) of section 7701 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.7701).
(cf: P.L.1983, c 571, s.2)
2. This act shall take effect immediately and apply to taxable years beginning after the date of enactment.
STATEMENT
This bill excludes federal employees' deferred compensation contributions from their gross income subject to taxation under the New Jersey gross income tax.
In 1986 Congress established the Federal Employees Retirement System; an important component of the system is the Thrift Savings Plan. The federal Thrift Savings Plan is a tax-deferred retirement savings and investment plan that offers the same type of savings and tax benefits that are offered to the employees of private corporations under 401(k) plans. Federal employees make their contributions to the federal Thrift Savings Fund for investment.
This bill excludes federal employees’ contributions to the Thrift Savings Fund from taxation under the New Jersey gross income tax. These contributions, together with any earnings generated during their investment in the Thrift Savings Fund, are subject to New Jersey gross income taxation when withdrawn from the fund.