Updated October 24, 2026. Quick answer: Line 20a of the 2025 NJ-1040 is where the taxable part of pension, annuity and IRA payments goes. The booklet opens with “Retirement income such as pensions, annuities, and certain IRA withdrawals is taxable in New Jersey.” “The New Jersey taxable amount may be different from the federal amount.”
What this line asks
The line is labeled Taxable Pension, Annuity, and IRA Distributions/Withdrawals. The instruction reads “Retirement income such as pensions, annuities, and certain IRA withdrawals is taxable in New Jersey.” “The New Jersey taxable amount may be different from the federal amount.” “Enter the taxable portion on line 20a.”
The state-level view is in New Jersey retirement taxes and whether New Jersey taxes pensions. On the federal return, the same payments appear at Form 1040 line 5a and 5b and Form 1040 line 4a and 4b, and the form that reports them is explained in 1099-R boxes explained.
Who it applies to
The booklet sorts retirement income by type. It lists what it calls common types of taxable retirement income, including “Pensions from the private sector;” “401(k) Plan distributions;” and “Early retirement benefits;”
It also lists income it treats as not reportable on this return: “Social Security benefits;” “Railroad Retirement benefits;” and “Public or private disability pension benefits until the year you turn 65.” “Beginning with the year you turn 65, the benefits are treated as ordinary pension income;”
What the instructions say to enter
| Step | What the booklet says |
|---|---|
| Opening statement | “Retirement income such as pensions, annuities, and certain IRA withdrawals is taxable in New Jersey.” |
| Federal difference | “The New Jersey taxable amount may be different from the federal amount.” |
| What to enter | “Enter the taxable portion on line 20a.” |
| Pension with no contributions | “Noncontributory. You made no contributions to your plan.” “Amounts you receive from these plans are fully taxable.” “Enter the amount from your 1099-R on line 20a.” |
| Pension with contributions | “Since you have already been taxed on your contributions, you must determine which portion of your distribution is taxable and which is excludable.” |
| Lump sum | “Report the taxable amount on line 20a and the excludable amount on line 20b.” |
| Rollover | “do not report the rollover on line 20a or 20b if it qualifies for deferral for federal tax purposes.” |
| 401(k) plans | “Contributions made on or after January 1, 1984, were not taxed when they were made.” |
| IRAs | “Use Worksheet C to calculate the taxable and excludable portions of your IRA withdrawal.” |
Contributory plans and the two methods
The booklet sorts plans this way: “Retirement plans are either noncontributory or contributory.” For a plan you paid into, “There are two methods of calculating the taxable and excludable amounts: Three-Year Rule Method and General Rule Method.” “To determine which method to use, complete Worksheet A on page 14 the year you begin receiving pension and annuity payments.”
For the Three-Year Rule Method it says “Do not report pension and annuity payments as income on line 20a until you have recovered all of your contributions.” “Once you have recovered your contributions, the payments you receive are fully taxable and must be reported on line 20a.” The General Rule Method says “Part of your pension is excludable and part is taxable every year.” The worksheets are laid out in columns of lines, so this page names them and does not read their entries. The excludable side is on NJ-1040 line 20b.
401(k) plans, IRAs and rollovers
For a 401(k) the booklet says “If you received a distribution from a 401(k) Plan, do not complete Worksheet A.” On IRAs it says “In general, your contributions were taxed when they were made and are not taxable when you make a withdrawal.” and “All the earnings and any amounts rolled over tax-free are taxable when withdrawn.”
For a rollover it says “The amount rolled over (minus previously taxed contributions) will be taxable when it is withdrawn.” For Roth IRAs: “If you received a nonqualified distribution, you must report the earnings on line 20a, and report the excludable portion on line 20b.” More detail on these accounts is in New Jersey 401(k) and IRA withdrawals and New Jersey annuity income.
The figures the line prints
The one figure the line 20a text prints in a running sentence is a time window for the Three-Year Rule Method: “Use this method if you will recover all your contributions within 36 months from the date you receive your first payment from the plan, and both you and your employer contributed to the plan.” The calculation worksheets are tables and are not read here.
Where the result goes next
The taxable portion is entered on this line, and the excludable portion goes to line 20b. For a lump sum, “Report the taxable amount on line 20a and the excludable amount on line 20b.” The booklet points to further reading: “For more information on pension and annuity income, see GIT-1 & 2, Retirement Income.”
Part-year residents
The booklet prints one sentence for this line: “Include only the taxable amounts you received while you were a resident of New Jersey.”
Edition and line numbers
This page reads the 2025 NJ-1040 New Jersey Resident Return booklet, the current file the New Jersey Division of Taxation served on 2026-10-24. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Counting Social Security on line 20a. The booklet lists “Social Security benefits;” among the items that do not belong on this return.
- Reporting a qualifying rollover as income. The booklet says “do not report the rollover on line 20a or 20b if it qualifies for deferral for federal tax purposes.”
- Filling out Worksheet A for a 401(k). The booklet says “If you received a distribution from a 401(k) Plan, do not complete Worksheet A.”
Related: New Jersey retirement taxes, whether New Jersey taxes pensions, New Jersey 401(k) and IRA withdrawals, Form 1040 line 5a and 5b, 1099-R boxes explained, and NJ-1040 pension exclusion lines 20a to 28c.
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Answer againSources
- 2025 NJ-1040 New Jersey Resident Return booklet (instructions and forms), New Jersey Division of Taxation: www.nj.gov
- 2025 Form NJ-1040 New Jersey Resident Income Tax Return, New Jersey Division of Taxation: www.nj.gov
Read from the state revenue documents linked above on October 24, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.