The only difference in cashing out your 401k in New Jersey, compared to any other state, is accounting for New Jersey state income taxes. The process is otherwise the same and performed directly with your 401k plan administrator. The state of New Jersey has income tax brackets ranging from 1.4 to 8.97 percent at the time of publication. When taking money out, you will need to address this expense as well as the federal income tax expenses, which are as high as 35 percent.
Call your 401k plan administrator at the number designated on your statement and request a distribution form.
Complete the form, double-checking your name, address and account information. You don't want a large distribution check sent to an old address.
Designate any state and federal tax withholding in the appropriate section of your distribution paperwork. Standard withholding is 10 percent for federal taxes unless you elect otherwise. There is no mandatory state withholding requirement.
Sign the form and turn it in to the 401k plan administrator. The plan administrator processes the distribution within 10 days of receipt.
Obtain the 1099-R for the distribution to complete your tax returns. Box 2 states the taxable portion added to both your federal and NJ state tax returns.