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Bill > S2357

NJ S2357

NJ S2357
Excludes certain contributions to deferred compensation plans and provides deduction for certain individual retirement savings under the gross income tax.

summary

Introduced
01/29/2024
In Committee
01/29/2024
Crossed Over
Passed
Dead
01/12/2026

Introduced Session

2024-2025 Regular Session

Bill Summary

This bill excludes from gross income taxation the elective contributions that employees of the public and non-profit sectors make toward their retirement savings, and allows a deduction for federally qualifying IRA contributions. The New Jersey gross income tax currently allows the employees of private, for profit, businesses to make tax-deferred contributions to the retirement savings plans authorized under section 401(k) of the federal Internal Revenue Code. Employees of the public and nonprofit sectors do not enjoy the same access to 401(k) plans as private sector employees. This bill expands the current provision to incorporate tax deferrals for the elective deferred compensation systems allowed to employees of governments and nonprofits. Charitable, educational and religious organization employees and public school employees are authorized by federal law to contribute toward their retirement savings under plans established under subsection (b) of section 403 of the federal Internal Revenue Code of 1986. State and local government and authority employers are authorized by federal law to make contributions under plans established under section 457 of the federal Internal Revenue Code, and federal employees are authorized by the federal Internal Revenue Code to make contributions to the federal Thrift Savings Plan. This bill gives the employees of federally tax-exempt charitable, educational or religious organizations; the employees of public school systems; the employees of state and local government and federal employees similar tax incentives for retirement savings that are provided under the New Jersey gross income tax to private sector employees. This bill also allows a gross income tax deduction for contributions to individual retirement accounts, or premiums paid to individual retirement annuities, that qualify for federal income tax deductions. IRA's are a significant retirement savings vehicle for employees whose employers do not offer a pension plan.

AI Summary

This bill expands tax benefits for retirement savings for public and non-profit sector employees in New Jersey, aligning them with those already available to private sector employees. Specifically, it excludes elective contributions made by these employees to their retirement plans from New Jersey's gross income tax. This includes contributions to plans authorized under section 401(k) of the federal Internal Revenue Code (often referred to as 401(k) plans), plans for annuity contracts under section 403(b), eligible deferred compensation plans for state and local government employees under section 457, and contributions to the federal Thrift Savings Plan. Additionally, the bill allows individuals to deduct contributions made to Individual Retirement Accounts (IRAs) or premiums paid for Individual Retirement Annuities from their gross income, provided these contributions are deductible for federal income tax purposes under section 219 of the Internal Revenue Code. This aims to provide similar retirement savings incentives to employees of charitable, educational, religious organizations, public school systems, state and local governments, and federal employees as are currently offered to private sector employees.

Committee Categories

Budget and Finance

Sponsors (2)

Last Action

Introduced in the Senate, Referred to Senate Budget and Appropriations Committee (on 01/29/2024)
(2 Companion Bills)

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