New Jersey Assembly Bill A2938

New Jersey 2022-2023 Regular Session

• Introduced: 2/28/22
• Refer: 2/28/22

Caption

Provides gross income tax exclusion for minimum required distributions from qualified retirement plans.

Impact

If enacted, A2938 would signify a substantial change in how retirement distributions are taxed at the state level in New Jersey. By excluding RMDs from taxable income, the bill aims to help senior citizens maintain greater financial security during their retirement years. It represents an effort to improve economic conditions for retirees, potentially allowing them to keep more of their income and manage their financial resources more effectively.

Summary

Assembly Bill A2938 aims to provide a gross income tax exclusion for minimum required distributions (RMDs) from qualified retirement plans for New Jersey taxpayers aged 72 and older. The legislation seeks to alleviate the tax burden faced by seniors who are mandated by federal law to withdraw a minimum amount annually from their retirement accounts. Currently, these RMDs are considered taxable income at both the federal and state levels, resulting in a financial penalty for failing to withdraw the prescribed amount.

Conclusion

In summary, Assembly Bill A2938 proposes a meaningful change to New Jersey's tax structure regarding retirement income, reflecting a growing sensitivity to the financial realities faced by older residents. This measure could empower seniors by allowing them to manage their retirement savings without the constraint of added tax liabilities on mandatory withdrawals.

Contention

The bill may face scrutiny and debate as it navigates through the legislative process. Proponents are likely to advocate for the necessity of ensuring financial relief for seniors, while opponents may raise concerns about the overall impact on state revenues. They might argue that while the bill supports a vulnerable demographic, it could exacerbate fiscal challenges for the state budget, especially in the context of funding essential services and programs.