bestbenefits.jpg (4312 bytes)


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.


What's New NJBEST


Opening an Account

Investment Info