Double vs. separate taxation


Q. My brother works for the U.S. Postal Service. He requested and received a distribution of $30,000 from his TSP account in 2014, before he turned 59 1/2.  Accordingly, he will be taxed for IRS purposes and get hit with the 10 percent early withdrawal penalty. That I know. He lives in New Jersey where TSP contributions are not excluded for N.J. state income tax purposes.

The question is as follows:  Is the $30,000 distribution from his TSP taxable in full for NJ state income tax purposes?  If so, seems like double taxation.

A. I don’t know of a reason why the income would not be taxable in New Jersey, as it would be in most other states. This is not double taxation, it’s separate taxation.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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