NJ 529 Plan Question

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HenryBemis
Posts: 31
Joined: Thu Feb 23, 2012 12:44 pm

NJ 529 Plan Question

Post by HenryBemis »

Hi folks!

So, I opened up a 529 for my kiddo when she was born (2016). I live in NJ and work in NY. Now, at the time, NJ didn't have a state sponsored plan so I opened up a NY one (NYSAVES), which uses Vanguard funds. If it matters, the kiddo has about $38K in there, ATM.

I recently learned NJ now has a state sponsored plan (NJBEST), which looks to be thru Franklin. The question is, would it be worth transferring the NY 529 over to the NJ plan?

I appreciate you all so much!
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: NJ 529 Plan Question

Post by toddthebod »

HenryBemis wrote: Wed May 15, 2024 10:26 am Hi folks!

So, I opened up a 529 for my kiddo when she was born (2016). I live in NJ and work in NY. Now, at the time, NJ didn't have a state sponsored plan so I opened up a NY one (NYSAVES), which uses Vanguard funds. If it matters, the kiddo has about $38K in there, ATM.

I recently learned NJ now has a state sponsored plan (NJBEST), which looks to be thru Franklin. The question is, would it be worth transferring the NY 529 over to the NJ plan?

I appreciate you all so much!
Did you take a NY state tax deduction on your contributions? They will claw that back if you rollover to NJ.
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retired@50
Posts: 13416
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: NJ 529 Plan Question

Post by retired@50 »

Using the NJ plan might save you a bit on your state income taxes.

It appears NJ offers a $10,000/yr deduction.

See link: https://www.savingforcollege.com/529-plans/new-jersey

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
lakpr
Posts: 11899
Joined: Fri Mar 18, 2011 9:59 am

Re: NJ 529 Plan Question

Post by lakpr »

NJ-BEST deduction of $10k is limited to a couple whose AGI is below $200k.

https://www.njbest.com/resources/faqs#w ... x-benefits

Fellow NJ resident here, who works in NYC and lives in NJ (Central NJ). We have invested in NYSAVES as well, for the NY state income tax deduction. We have also contributed nominal amounts for our kids in the NJ-BEST, for the "scholarship" benefit

https://www.njbest.com/manage/apply-njbest-scholarship

If you contribute $3,600 to NJ-BEST, you will get $6k in "scholarship" after 12 years. That comes out to be a CAGR of 8.5% for the 12 years the money remains within the plan. With the kid currently already 8 years old, you have a limited time to contribute that $3,600 (and withdraw the money while the kid is in junior or senior year in college, not earlier than that).

<< of course, the big catch is that the kiddo must attend an in-state school >>
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