It is narrated from Sayyiduna Ibn Umar (may Allah be pleased with them both) that the Noble Prophet (peace and blessings be upon him) said: "When a Jew greets you with Salam, he says «السام عليك», so in reply you should only say «وعليك»." And in another narration: When the Jews greet you with Salam, you should say "Wa Alaikum" in response, because they say «السام عليكم» (death be upon you).
Hadith Referenceمسند احمد / مسند المكثرين من الصحابة / 4563