This bill amends the New Jersey Better Educational Savings Trust (NJBEST) program to allow distributions from NJBEST accounts to be considered qualified withdrawals when rolled over into a Roth IRA. This change aligns state law with recent federal legislation that permits such rollovers without incurring tax liabilities. The bill specifically updates the definitions within the NJBEST program, including the definition of "qualified withdrawal" to encompass these special rollovers, and it excludes these distributions from gross income tax calculations.

The amendments include the addition of language that clarifies the conditions under which these rollovers can occur, such as the requirement that the 529 savings account must have been open for at least 15 years and that the Roth IRA must be established in the name of the designated beneficiary. The bill aims to provide tax advantages for families saving for higher education by ensuring that funds rolled over from a NJBEST account to a Roth IRA are not subject to state income tax, thereby encouraging savings for educational expenses. The act 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