NJBEST

Frequently Asked Questions

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NOTE: For all answers provided below, please refer to the Investor Handbook for more detailed information.

What are the benefits just for New Jersey residents?

What are the federal tax benefits?

Investments grow federal income tax free, and withdrawals for qualified higher education expenses are free from federal income taxes. Contributions are not tax deductible.

Tax benefits are conditioned on meeting certain requirements. Federal income tax, a 10% federal tax penalty, and state income tax and penalties may 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 information.

What is the minimum investment to open a plan?

You can open an NJBEST 529 College Savings Plan with as little as $25. The maximum aggregate plan balance per beneficiary is $305,000.

Do I own the plan?

Absolutely. You--not the beneficiary-- control how and when plan assets are spent for higher education expenses.

Can I change the beneficiary?

Yes, you can change the beneficiary at any time. To avoid taxes, however, the new beneficiary must be a member of the previous beneficiary's family (including children, grandchildren, siblings, spouses, nieces and nephews, aunts and uncles, cousins and in-laws).2

Can I access my money for a non-education-related expense?

Yes. You can access your money at any time. However, if you withdraw money for reasons other than qualified higher education expenses, you must pay federal income tax, a 10% federal tax penalty, and may be liable for state income tax and penalties on the taxable portion of the earnings.

Can I change my investment option?

Yes, you may reallocate the assets in your plan twice each calendar year or whenever you change the account beneficiary.

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.

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. For more information, click here.

What education expenses can I pay for with my assets?

Savings may be applied to tuition, fees, required books, supplies and equipment, and room and board if the beneficiary is enrolled at least half time.2

Are there restrictions on schools?

No. The beneficiary can attend any university, college or vocational school accredited by the U.S. Department of Education, including many educational institutions outside the United States. To review which schools have been accredited by the US Department of Education, visit the USDOE website.

What is the NJBEST program management fee?

The program management fee is currently 0.10% annually. This fee is used to pay for the services of Franklin Templeton Distributors, Inc., and its affiliates and subcontractors under the Services Agreement, as well as the New Jersey Higher Education Student Assistance Authority for its services in connection with the program. The program management fee is subject to change. Investment management fees and expenses are also assessed by the mutual funds in which the plan portfolios generally invest. Please see the Investor Handbook for further discussion of the expenses associated with an NJBEST plan.

What can I use the money for?

Qualified higher-education expenses include:
• Tuition
• Certain room-and-board expenses
• Fees
• Books
• Supplies and computer equipment

Questions? Call us at 877-4-NJBEST or read the the Investor Handbook for more information.

How do I withdraw money for education expenses?

Online, Telephone or by Mail

To make an online withdrawal to the account owner:
Logon to your NJBEST account
• The proceeds may then be sent by check to the address on file or electronically to a bank account on file
• Allow up to 10 calendar days for receipt of a check or 2-3 business days for receipt of an electronic funds transfer

To make a withdrawal by phone to the account owner or the school directly (if on file):
• Call us at 877-4-NJBEST

To make a withdrawal by mail for proceeds to be sent directly to the college, a third party or a new checking/savings account:
• Download and print the Withdrawal Request Form
• Requests to send a check directly to the college, the beneficiary's address currently on file, or to the beneficiary's or your bank account may be returned via fax to (727) 299-8719
• Requests to send proceeds by check, Federal Wire or electronically to a third party require that you obtain a signature guarantee stamp, as indicated in Section 4, and the completed form must be returned by mail to NJBEST 529 College Savings Plan, P.O. Box 33090, St. Petersburg, FL 33733-8090.

To avoid processing delays, make sure you've filled out all sections of the form. And remember to factor mailing time into your planning.

How are withdrawals reported to the IRS?

You or the student will receive IRS Form 1099-Q in the first quarter, if you made a withdrawal the previous year. Note: If you received the money, then you get the form. If the child or school received the money, the child will get the form.

This form will show gross distributions, earnings, and principal. If any of the earnings are considered taxable, they should be reported on Form 1040 as part of a federal income tax return. Be sure to keep records of all qualified expenses.

Can the funds in my NJBEST 529 account be used for a school outside of New Jersey?

Yes! The money on your NJBEST 529 account can be used at a wide range of schools. In fact, money in your 529 account can be used at over 10,000 accredited schools in the U.S., and many outside the U.S.

Source: http://ope.ed.gov/accreditation, April 2016.

What is the minimum to open an account?

You can open an NJBEST 529 College Savings Plan with as little as $25. There are no monthly or annual minimums.

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  1. Investing in NJBEST does not guarantee admission to college in New Jersey or elsewhere. The scholarship is awarded during the beneficiary's first year of college.

  2. Please read the Investor Handbook for more information.