Are 403(b) distributions taxable?

Ask NJMoneyHelp

Photo: dhester/

Q. My wife is a retired New Jersey teacher who had a 403(b) plan for 35 years. It appears her contributions were taxed by the state each year and never reduced her taxable income. Do I include this in her Required Minimum Distributions at 70 1/2? If I do, how do I separate her basis from her interest over the past 35 years?
— Husband

A. Thanks to your wife for all her years of service to the children of New Jersey.

You are correct. Her contributions were taxed in New Jersey when she made them, therefore, the contributions are not taxed when her Required Minimum Distributions occur, said Abby Rosen, a certified financial planner with RegentAtlantic in Morristown.

For more information on how to calculate any piece that’s taxable, check this link at the Treasury Department’s website.

Rosen said there are two different formulas to use depending on your wife’s situation. Check the section called “Contributory Plans” on page four to determine which formula to use.

“The custodian may have record of your wife’s contributions over the years, but ultimately it’s up to you to track the basis,” Rosen said. “Be sure to discuss any tax issues with your tax advisor.”

Email your questions to moc.p1529488180leHye1529488180noMJN1529488180@ksA1529488180. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.