NJ to Tax 401k?

This is outrageous. As my wife so clearly said this morning, “They are taxing our retirement savings to support their profligacy.”

10 Responses to “NJ to Tax 401k?”

  1. Crusader says:

    God forbids anybody should think of cutting expenses……

  2. Jorgen says:

    Two anonymous quotes:
    “There is no art which one government sooner learns of another than that of draining money from the pockets of the people.”
    “All the taxes paid over a lifetime by the average American are spent by the government in less than a second.”

  3. Dave J says:

    The whole point of 401(k)’s and related plans is that any taxes on them are deferred until you take a distribution. In my generosity, I suppose I just assumed that Congress had already made sure the states couldn’t do that either, but if not, that needs to be changed ASAP.

  4. Ken Summers says:

    As Dave pointed out, 401Ks are not tax exempt, they are tax deferred. This will be a nightmare down the line as people and tax agencies will have to sort out what is legitimately taxable at disbursement and what has already been taxed.
    This assumes, of course, that the state does not attempt to tax the same money twice (at deposit and at disbursement).

  5. Dave J says:

    I’m just kind of surprised that it’s New Jersey and not Massachusetts that came up with this outrageous idea.

  6. Ken Summers says:

    Good point, Dave. And after posting, I realized it’s even worse than I thought. I assumed only taxation on deposits, without considering that all of the earnings have to be taxed on an ongoing basis (interest on bond funds, capital gains in managed stock funds).
    And what about employer-matched funds? Will they be taxable by the state as additional income?
    The Feds really need to fix this.

  7. Mr. Bingley says:

    This will really be a mess for the Dems in NJ, as they control both houses and want to get Corzine elected next year.

  8. Bill McCabe says:

    Wouldn’t it be nice if we had a Republican party organization in this state capable of beating these schmucks?

  9. Mr. Bingley says:

    Yeah, it would bill. Sadly, the best the Republicans come up with are the Whitmans and Keans of the world, and I’m not sure if they’re any better.

  10. The Real JeffS says:

    Outrageous! Yeah, why cut spending when there’s all this untaxed potential sitting out there, even if those funds were originally set up for retirement?
    Greedy bastards.

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