About NJBEST
Advantages of NJBEST
NJBEST scholarship
For parents
For grandparents
For you and others
Investment manager
Portfolio options
Automatic investing
Frequently asked questions




Advantages of NJBEST

If you're comparing NJBEST with other types of college savings programs, start with the 10 advantages below.

1. Double tax-free advantage

Your investments in NJBEST grow tax deferred if they're withdrawn to pay for qualified education expenses; you will not owe federal or New Jersey state income taxes on earnings.

The following table shows how tax-free compounded growth can help your money grow thus reducing tax-free amounts shown in the table.

The Effect of Taxes on Your Account
Hypothetical growth of a 529 college savings plan over 18 years, a $15,000 one-time investment:
Taxable account Tax-free 529 plan Difference
$43,368 $63,009 $19,641
  Each plan account is subject to an annual program management fee of 0.40% of assets and underlying fund expenses, currently up to 0.81% of assets, which may vary. See the Investor Handbook for more complete information.

These expenses are not reflected in the illustration, if they were, amounts shown would be lower.

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. See the Investor Handbook for more complete information.

Assumes an 8% annual fixed rate of return compounded monthly, that investors are in a combined 26.8% federal and New Jersey state income rate and for the tax-free plan, and tax-free treatment over the 18-year period.

NJBEST qualified withdrawals are free from New Jersey state income tax for New Jersey taxpayers only; taxpayers of other states may be subject to state income taxes on qualified withdrawals. If you pay state taxes in other states, you should evaluate whether the state(s) offer(s) tax incentives or benefits that may not be available to you or your beneficiary under NJBEST.

Examples are for illustrative purposes only and do not represent any particular investment. 529 plans do not guarantee your investment or any specific rate of return and you may have a gain or a loss on the amounts invested. Periodic investing plans do not assure a profit and do not protect against loss in a declining market. Since such plans involve continuous investment in securities regardless of their fluctuating price levels, it's prudent to consider your financial ability to continue making purchases through period of low price levels.
2. Gift and estate tax advantages

An individual may 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 taxes if you make no gifts to that beneficiary in 5 years. That amount equals 5 times the annual gift tax exclusion! And assets in each plan might not be included in your federal taxable estate.

Tax benefits may be conditioned on meeting certain requirements. 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 the taxable estate. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. See the Investor Handbook for more complete information.

3. Assets managed by Franklin Templeton Investments

Franklin Templeton Investments, one of the nation's largest and oldest investment managers, is a recognized leader in domestic and international investing.2

4. A wide range of portfolio options

With NJBEST 529 College Savings Plan, you have access to 7 Franklin Templeton investment options: 1 age-based portfolio and 6 additional customized investment portfolio options, each offering a distinct investment strategy.

5. Flexibility and control

NJBEST helps you save for anyone: a child, a grandchild, yourself or even a friend. If you open a plan, you own and control the assets including deciding when to make withdrawals to pay for tuition or other qualified college-related expenses. You can even change the beneficiary annually from one family member to another.

6. Low minimum investment

People at all income levels will find NJBEST easy to use. You can open a plan for as little as $25.

You also may participate in a convenient automatic investment plan. For details, please use the "Automatic investing" link at the top of this page, on your left.

7. High contribution limits

NJBEST 529 College Savings Plan lets you accumulate as much as $305,000 for each beneficiary's plan.

8. Broadly defined qualified higher education expenses

After building a nest egg to pay for education, what can you use it for? Distributions from your NJBEST 529 College Savings Plan can pay for qualified expenses at almost any accredited post-secondary school. Qualified expenses fall into 5 categories:

  • Tuition
  • Room and board (if enrolled at least half time)
  • Required books
  • Fees
  • Required equipment
Don't forget—assets withdrawn for purposes other than qualified higher education expenses will be subject to a 10% federal tax penalty and ordinary federal and state income taxes on the earnings portion of the withdrawal.

9. Financial aid break in New Jersey

New Jersey excludes $25,000 of your NJBEST 529 College Savings Plan from the student's financial need evaluation when determining eligibility for any scholarship, grant or other monetary assistance awarded by the state. Other states may not offer such a provision.

10. Scholarship

Although NJBEST assets can be used at any U.S. college or university,3 students pursuing higher education in New Jersey can receive an extra benefit for their freshman year—a tax-free scholarship of up to $1,500.

For more information about the scholarship program and eligibility, select "NJBEST scholarship" from the navigation topics on the left.

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 1-877/4NJBEST or click here. You should read the Investor Handbook carefully before investing and consider whether your or the account beneficiary's home state offers any state tax or other benefits that are available for investments only in its qualified tuition program.

Footnotes
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.
2. The plan is managed by Franklin Advisers, Inc., an affiliate of Franklin Templeton Distributors, Inc. Plan portfolios generally invest in mutual funds managed by affiliates of Franklin Advisers, Inc.
3. NJBEST is sponsored by the state of New Jersey. Having an NJBEST 529 College Savings Plan does not guarantee admission to college in New Jersey or elsewhere, or sufficient funds for college.