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About NJBEST | |
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Advantages of NJBEST | |
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NJBEST scholarship | |
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For parents | |
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For grandparents | |
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For you and others | |
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Investment manager | |
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Portfolio options | |
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Automatic investing | |
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Frequently asked questions |  |
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| Frequently Asked Questions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| What is the minimum amount to open a plan?
You can open a plan for as little as $25 and maintain it by investing a minimum of $25 monthly, or $300 annually, until your plan reaches $1,200.
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| What are the tax benefits?
Withdrawals for qualified higher education expenses are free from New Jersey state income tax and federal income tax. Contributions are not tax deductible. Individuals may also contribute up to $65,000 (or $130,000 if a married couple) per beneficiary to a plan in a single year without paying federal gift tax if no further contributions are made to the same beneficiary in a 5-year period. Assets in each plan may not be included in your federal taxable estate. Tax benefits may be conditioned on meeting certain requirements. Federal tax, a 10% penalty and state tax apply to nonqualified withdrawals of earnings. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. Gift examples are general; individual financial circumstances and state laws vary-consult a tax advisor before investing. If the contributor dies within the five-year period, a prorated portion of contributions may be included in their taxable estate. See the Investor Handbook for more complete information.
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| Do I own the plan?
Absolutely. You—not the beneficiary—maintain control over how and when plan assets will be spent for higher education expenses.
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| Can I change my investment option?
Yes, you may reallocate the assets in your plan to one or more other Franklin Templeton investment option(s) once every calendar year and additionally, whenever you change the plan's beneficiary.
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| Can I change the beneficiary?
Yes, you can change the beneficiary at any time. To avoid taxes, the new beneficiary must be a member of the previous beneficiary's family, including children, stepchildren, grandchildren, siblings, spouses, nieces and nephews, aunts and uncles, cousins and in-laws.
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| What if my beneficiary doesn't go to college?
You can select a new beneficiary but he or she must be a member of the previous beneficiary's family.
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| What if I need my money for a non-education related
expense?
If you withdraw money for reasons other than qualified higher education expenses, you must pay federal and state income tax, and a 10% federal tax penalty on earnings.
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What education expenses are considered eligible?
Your beneficiary can attend almost any full-time or part-time undergraduate or graduate school in or outside New Jersey. Assets may also be used for training after high school at many proprietary trade schools. In both cases, assets may be applied to tuition, fees, required books and supplies, equipment and room and board if the beneficiary is enrolled at least half time.
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| How can I benefit from the scholarship plan?
NJBEST offers a scholarship that rewards students who pursue higher education in New Jersey. The plan offers increasingly larger scholarships based on how long you save, up to a maximum $1,500 scholarship for over 12 years of saving: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Does my beneficiary have to attend school in New Jersey?
No. To qualify for an NJBEST scholarship, however, the student must attend a New Jersey college.
No. NJBEST 529 College Savings Plan does not guarantee your investment or any specific rate of return, which means you may have a gain or a loss when you sell your interest in the plan.
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| Can I set up a plan for beneficiaries other than my own children?
Absolutely. You can establish a plan for you, your children or even a friend.
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| Can I move assets from an UGMA/UTMA account to an NJBEST plan?
Yes. To move assets from an UGMA or UTMA account into an NJBEST plan, the custodian must liquidate any securities in the UGMA/UTMA account and transfer cash into the NJBEST plan. This liquidation is a taxable event, and the minor owner of the UGMA/UTMA assets will be taxed on any gain realized on the liquidated securities. In the transfer, the minor must remain the account's beneficiary at all times and when the minor becomes a legal adult, he or she will gain full control of the disposition of the plan assets. These factors have significant income, estate and gift, and financial aid qualification considerations that should be discussed in detail with your tax advisor before deciding to transfer UGMA/UTMA assets into an NJBEST plan.
Investors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain the Investor Handbook, which contains this and other information, call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Footnote | |
| 1. | Offered and administered by the New Jersey Higher Education Student Assistance Authority (HESAA); managed and distributed by Franklin Templeton Distributors, Inc., an affiliate of Franklin Resources, Inc., which operates as Franklin Templeton Investments. No federal or state guarantee. Principal value may be lost, and investing in the plan does not guarantee admission to college or sufficient funds for college. Please refer to the Investor Handbook for more complete information. |
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Relevant Links |
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Investor kit |
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College planning calculator |