SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 737 and SENATE, No. 951
STATE OF NEW JERSEY
DATED: FEBRUARY 28, 2022
The Senate Budget and Appropriations Committee reports
favorably a committee substitute for Senate Bill No. 737 and Senate
Bill No. 951.
This committee substitute provides taxpayers a gross income tax
exclusion in the amount of contributions made to certain retirement
plans, and allows a deduction for contributions to individual retirement
accounts, or premiums paid to individual retirement annuities, that
qualify for federal income tax deductions. The affected types of plans
are: (1) a plan established under section 401(a) or section 401(k) of the
federal Internal Revenue Code; (2) amounts paid for annuity contracts
under section 403(b) of the federal Internal Revenue Code, allowed to
employees of governments and nonprofits; (3) a deferred
compensation plan of a state or local government that meets the
requirements of section 457 of the federal Internal Revenue Code; (4)
a federal Thrift Savings Plan; or (5) a standard Individual Retirement
Account pursuant to section 408 of the federal Internal Revenue Code.
The contributions to these plans are taxed upon distribution from the
account.
The committee substitute applies to contributions made and
amounts paid on or after January 1 next following enactment.
FISCAL IMPACT:
The Office of Legislative Services estimates that the State will not
collect about $204.6 million each year because of the deferral of the
taxation of contributions to concerned employer-sponsored retirement
savings and deferred compensation plans from the year of contribution
to the year of withdrawal. An indeterminate portion of the total will be
collected in future tax years. The indeterminate remainder will be lost
across tax years.