New Jersey Assembly Bill A5674

New Jersey 2024-2025 Regular Session

• Introduced: 5/15/25
• Refer: 5/15/25

Caption

Excludes certain retirement savings plan contributions, withdrawals, and rollovers from gross income tax.

Impact

Should A5674 become law, it is expected to significantly impact how retirement income is taxed in New Jersey. By exempting these types of contributions and withdrawals from gross income, the bill aims to incentivize residents to save more for retirement. This could potentially lead to increased financial independence among retirees and may decrease reliance on state assistance programs. Additionally, it is meant to align New Jersey's tax treatment of retirement savings with those of other states that have similar protections in place.

Summary

Bill A5674, introduced in the New Jersey Legislature, focuses on amending the state’s tax code concerning retirement savings plans. The primary objective of the bill is to exclude contributions, qualified withdrawals, and rollovers from various types of retirement savings accounts from being counted as gross income for tax purposes. This would include plans established under IRS sections such as 401(a), 401(k), 403(b), and IRAs, aiming to enhance financial security for taxpayers, especially as they approach retirement age.

Statement

The bill's proponents, including its sponsor Assemblyman Robert Auth, advocate for these changes as necessary reforms that will aid New Jersey taxpayers in achieving greater financial well-being as they transition into retirement. The intent is to remove barriers for citizens planning their financial futures while ensuring they can enjoy their retirement without undue financial strain.

Contention

While the bill has garnered support for encouraging retirement savings and alleviating tax burdens for individuals and couples planning for retirement, it may face opposition regarding its implications on state revenue. Critics might argue that such exclusions could reduce tax revenue, complicating budgetary considerations for state-funded services and programs. Supporters contend that the long-term benefits of a financially secure aging population outweigh the immediate fiscal concerns.