Q. Are there possible tax implications if I move my current 529 plan from NJBEST to another financial institution? Are there any specific benefits to leaving it with NJBEST besides the $1,500 scholarship?
This story was originally published on April 5, 2019. Currently (February 2024), New Jersey offers tax deduction for upto $10,000 in contributions to NJBEST if your gross income is $200,000 or less. SEE HERE
— Planning ahead
A. You’re in luck.
The IRS allows you to move your 529 account from one plan to another for the same beneficiary, tax free, once in a 12-month period, said Deva Panambur, a certified financial planner with Sarsi, LLC in West New York.
“Since New Jersey does not give tax benefits for 529 contributions, there is no risk of recapture of state tax benefits,” he said.
Panambur said the New Jersey plan may charge a fee as much as $75 for rollover distributions, although no fee is listed in the December 2018 Investor Handbook.
“As you mention, depending on the amount of contribution and how long the account has been open, eligible beneficiaries of the New Jersey 529 plan can receive a scholarship of up to $1,500 for attendance to an eligible New Jersey higher education institute,” Panambur said. “You will lose that benefit if roll over your account to a different state’s plan.”