Is a 529 plan worth it in NJ?

Is a 529 plan worth it in NJ?

Financial planners agree that a 529 plan is usually the most advantageous way to save for a college education. Funds in the account grow tax-free — just like an IRA — and they stay free of tax as long as you use the money for qualified education expenses, such as tuition, room and board and supplies.

How does a 529 plan work in NJ?

529 plans allow families to invest for college on a tax-deferred basis. The investment is tax-free when a family takes a distribution to pay for qualified education expenses. 529 plans also receive favorable treatment on the Free Application for Federal Student Aid (FAFSA).

How much can you contribute to a 529 in NJ?

$305,000
Maximum Contribution New Jersey’s direct-sold 529 college savings plan helps families invest in their children’s future education by starting out with as little as a $25 deposit. In total, they can contribute a maximum of $305,000.

Does NJ give a tax break for 529 contributions?

Contributions are not tax deductible. Up to $10,000 per year may be withdrawn from 529 savings plans, federal income tax-free, if used for tuition expenses at private, public and religious K-12 schools. In addition, up to $10,000 may be paid toward principal or interest of a student loan for the beneficiary or sibling.

Who runs NJ 529?

Franklin Templeton
NJBEST New Jersey’s 529 College Savings Plan is offered and administered by the New Jersey Higher Education Student Assistance Authority (HESAA); managed and distributed by Franklin Distributors, LLC, an affiliate of Franklin Resources, Inc., which operates as Franklin Templeton.

Can grandparents deduct 529 contributions in New Jersey?

Yes, 529 plans accept third-party contributions, so a grandparent may contribute to a grandchild’s 529 plan account, regardless of who owns the account.

Can a 529 be used to buy a house?

Mortgage Payments Do Not Qualify as Room and Board Even if the student were to buy the home, they still can’t use 529 plan money to make the mortgage payments. A mortgage payment is a payment on a loan and not a payment of housing costs. As such, it is not a qualified higher education expense.