Bill > S371

Introduced Session

This bill excludes from gross income subject to taxation under the New Jersey gross income tax the contributions that certain federal criminal investigators make to the federal deferred compensation program for retirement savings. This bill excludes contributions to the federal Thrift Savings Fund made by an employer on behalf of and at the election of a federal employee who is in the GS-1811 series in the General Schedule classification system. The General Schedule classification system is based on United States Office of Personnel Management classification standards, and criminal investigators are classified in the GS-1811 series. Private sector employees are permitted by section 401 of the federal Internal Revenue Code to make arrangements with their employers to divert part of their salaries to retirement funds. These "cash or deferred arrangement" contributions have been exempt from taxation under the New Jersey gross income tax since 1984. In 1986, Congress established the Federal Employees Retirement System which allowed federal employees to make federally tax deductible contributions to their own retirement fund, the Thrift Savings Fund, under a system very similar (but not identical) to that allowed under section 401 of the federal Internal Revenue Code. Contributions made to the federal Thrift Savings Fund, however, are not exempt under the New Jersey gross income tax. This bill excludes contributions to the federal Thrift Savings Fund on behalf of federal employees who are classified as "criminal investigators" from current taxation under the New Jersey gross income tax. Those amounts will, like other pension payments, become taxable when paid out to employees on their retirement (and will, like other pension payments, they will qualify for the New Jersey pension payment exclusion). This bill also makes a technical change to the statute governing the taxation of pay-outs, to specify the method used for determining the taxable amount for New Jersey tax purposes will be the same as the method used for federal tax purposes.

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Joe Pennacchio (R)*, 

Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee (on 01/09/2024)

Official Document