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 to the NJBEST program are significant as they provide a tax-advantaged way for individuals to transfer funds from a 529 savings account to a Roth IRA, thereby enhancing the flexibility of educational savings options. The bill outlines specific conditions for these rollovers, such as the requirement that the 529 account must have been open for at least 15 years and that the funds rolled over must have been deposited at least five years prior to the rollover. By incorporating these changes, the bill aims to facilitate better financial planning for families saving for higher education expenses while ensuring compliance with federal tax regulations.

Statutes affected:
Introduced: 54A:6-25