|
| What is a qualified state
tuition program? |
|
Congress passed the "Small Business Job Protection Act of
1996", Pub.L.104-188, which amended the Internal Revenue Code of
1986 to provide favorable federal tax treatment for college savings
programs established by states and for the participants in such
programs. The Tax Code was further amended in the "Taxpayer
Relief Act of 1997" to broaden the coverage of qualified college
savings programs.
NJBEST is a "qualified state tuition program" as defined
in the federal law and was established pursuant to this federal
legislation. In order to maintain the favorable federal tax treatment
for the program and its participants, NJBEST must adhere to the
provisions of the federal law and regulations. Should changes occur in
federal law in the future, the NJBEST program may be required to make
conforming changes to its rules and procedures.
|
| What is the NJBEST
Scholarship? |
|
If a beneficiary enrolls as a freshman in a collegiate program at a
New Jersey college, university, or a degree granting program at a New
Jersey proprietary school licensed or approved by the New Jersey
Commission on Higher Education, and has had an account maintained for
him/her for at least four years, the State will award a scholarship in
the amount of $500.
|
| Where can I use NJBEST
savings? |
|
NJBEST savings may be used for full-time or part-time undergraduate or
graduate study at in-state or out-of-state colleges and universities.
NJBEST savings may also be used at proprietary institutions that
participate in Federal Title IV Student Aid Programs.
|
| What expenses do NJBEST
savings cover? |
|
Savings may be applied to tuition, fees, books and supplies, and
equipment required for enrollment as defined under the Internal
Revenue Code. Savings may also be used for room and board. NJBEST
savings used to pay these expenses are considered qualified
withdrawals.
|
| What happens if I withdraw
NJBEST savings for a purpose other than higher education? |
|
This is a nonqualified withdrawal. Nonqualified
withdrawals result in state tax liability on earnings, incur normal
tax liability for federal purposes, and require the State to assess
a ten percent (10%) penalty on earnings.
|
| How do I make a qualified
withdrawal? |
|
Before the beneficiary enrolls, verify that the
institution is a participant in Federal Title IV Student Aid
Programs by either contacting the institution itself, or by
contacting the U.S. Department of Education via its toll-free number
(1-800-872-5987). After enrollment, you may request a withdrawal
form by calling NJBEST. After returning the completed withdrawal
form along with any other documentation that may be required to
NJBEST, the funds will be disbursed.
|
| How will the program affect a
beneficiary's eligibility for financial aid? |
|
The first $25,000 saved in NJBEST for a beneficiary
will not be a factor in determining the beneficiary's eligibility
for state-funded, need-based financial aid. Being the beneficiary of
an NJBEST account might have an impact on the calculation of
financial aid from other sources, such as the federal government or
a college. In addition, the treatment of NJBEST accounts in
determining financial aid eligibility and the availability of
financial aid may change in future years. Even under today's
financial aid eligibility criteria, most families and students are
required to spend some of their own funds to help pay for college.
NJBEST is designed to help families meet those financial
expectations.
|
| What happens if a beneficiary
receives a scholarship? |
|
NJBEST savings can be left in the account for use in
the future. There are no age limits for beneficiaries in the NJBEST
program. In addition, the account can be transferred to another
member of the family. Finally, amounts can be withdrawn without
penalty up to the amount of the scholarship.
|
| Will participating in the
NJBEST program guarantee that the beneficiary will be admitted to
college, or obtain a degree? |
|
No. Participating as a beneficiary in the NJBEST
program has no effect on college admissions, continued enrollment,
or graduation.
|
| What fees will the
contributor have to pay? |
|
Contributors will pay a $15.00 annual account
maintenance fee, plus the Authority will charge an investment fee
and service charge of the first one percent (1%) of the earnings of
the Trust for periods when earnings are greater than one percent, or
the actual earnings for periods when the earnings are one percent or
less.
For example, if the earnings are eight percent (8%), the first
one percent will be used as an investment fee and service charge,
and the remaining seven percent will be distributed to the
contributor accounts. In the unlikely event the earnings are less
than one percent, the earnings will be applied to an investment fee
and service charge, and no earnings will be distributed to the
contributor accounts for that period. Similarly, if there are no
earnings, there will be no investment fee and service charge for
that period.
|
| Are contributions to NJBEST
accounts subject to gift tax? |
|
Contributions to NJBEST accounts are treated as
completed gifts under the Internal Revenue Code, therefore,
contributions to NJBEST accounts of $10,000 or more per beneficiary
annually may have gift tax implications. Please consult your tax
adviser.
|
| What if a beneficiary becomes
disabled or dies? |
|
The account may be closed without penalty with proper
documentation of the death or disability.
|
| What happens to the NJBEST
account if the contributor dies? |
|
In general, the account will not be considered part of
the contributor's estate and will belong to the beneficiary. Please
consult your legal adviser. |
|
|
| For more menu items use the menu up
and to your right. |
