Someone told me if I do a transfer of funds or stock from one IRA to another in New Jersey that I must pay income tax on the transaction. This seems nuts, but you never know with politicians and bureaucrats. I suppose she meant N.J.tax.

There is nothing different in the NJ treatment of IRA transfers/rollovers from that at the federal level. The only difference between NJ and federal treatment of IRAs is that NJ doesn't allow you to deduct IRA contributions under any circumstances. This means that all IRAs have basis under NJ law and distributions are always partially tax-free. Of course, most NJ IRA participants fail to track their IRA contributions for NJ purposes and end up paying more tax than they have to since they can't establish their NJ IRA basis.

Ira