MORRIS COUNTY — Over 80 percent of New Jerseyans polled by AARP are concerned that they can’t save enough for retirement, and Assembly Anthony M. Bucco has an immediate solution: exempt all retirement contributions from state income taxes.
New Jersey is currently one of three states that does not exempt retirement contributions from taxes as the federal government does.
“There is no incentive for people to save for retirement in New Jersey, which keeps a lot of people who struggle to make ends meet in a precarious financial position,” said Bucco(R-Morris). “The expanded options to save without reducing income will be a boon to those who struggle to fund their retirement.”
Bucco’s bill (A1406) exempts contributions to employer sponsored retirement savings accounts, including defined benefit 401(a) plans, deferred compensation plans by public employers, annuity contracts, and contributions to the federal Thrift Savings Fund. The legislation also allows contributions to individual retirement arrangements (IRAs) to be deducted from state income taxes.
“Taxpayers need immediate assistance to help them save for retirement,” Bucco emphasized. “New Jersey taxes the heck out of people, and it is making it hard for workers to imagine a comfortable retirement. They simply don’t have the means to save enough if their contributions are taxed.”
The poll also found support for a private-public retirement savings program, but the cost for employers, as well as concerns it may violate the federal Employee Retirement Income Security Act of 1974, provide hurdles for the idea.
A bill implementing a similar program became law in 2016. The program was supposed to be functional by January 2018, but still does not exist and does not have a certain timetable. The legislature has considered enacting a program alike the one in 2016.
