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.