This bill amends New Jersey law to allow distributions from a New Jersey Better Educational Savings Trust (NJBEST) account to a Roth IRA to be classified as qualified withdrawals, thereby exempting these distributions from state income tax. The amendments align state law with recent changes in federal tax legislation, specifically under section 529 of the federal Internal Revenue Code, which permits special rollovers from 529 savings accounts to Roth IRAs under certain conditions. The bill defines a qualified withdrawal to include these rollovers, ensuring that the earnings from the NJBEST account remain tax-exempt when transferred to a Roth IRA.

Additionally, the bill updates various definitions within the NJBEST program, including the definitions of "designated beneficiary," "qualified higher education expenses," and "qualified withdrawal," to reflect the new federal provisions. It specifies that the rollover must meet certain criteria, such as the 529 account being open for at least 15 years and the Roth IRA being established in the name of the designated beneficiary. The bill is set to take effect immediately and will be retroactive to taxable years beginning on or after January 1, 2024.

Statutes affected:
Introduced: 54A:6-25