N.J. Admin. Code § 9A:10-7.3

Current through Register Vol. 56, No. 11, June 3, 2024

Section 9A:10-7.3 - Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Account" means an individual trust account or savings account established as prescribed in this subchapter.

"Authority" means the New Jersey Higher Education Student Assistance Authority.

"Cash" means cash, check, money order or electronic transfer.

"Contributor" or "account owner" means the person or organization who opens the account and maintains the account and has the right to withdraw monies from the account before the account is disbursed to the designated beneficiary.

"Designated beneficiary" means:

1. The person designated at the time the account is opened as the person whose higher education expenses are expected to be paid from the account;

2. The replacement beneficiary if the change in designated beneficiary would not result in a distribution that is included in Federal gross income under section 529 of the Federal Internal Revenue Code; and

3. In the case of an interest in the program established under P.L. 1997, c. 237 purchased by a state or local government or an organization described in section 501(c)(3) of the Federal Internal Revenue Code as a part of a scholarship program operated by the government or organization, the person receiving this interest as a scholarship.

"Disability" means a condition under which an individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he or she furnishes proof of the existence thereof in the form of a certification by a physician who is a doctor of medicine or osteopathy and legally authorized to practice in a state that the individual is disabled.

"Higher education institution" means an eligible educational institution as defined in or for purposes of section 529 of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 529, except that with respect to proprietary institutions, only degree granting programs licensed or approved by the Office of the Secretary of Higher Education (OSHE) shall be included in the definition of higher education institution for purposes at N.J.A.C. 9A:10-7.15, and only proprietary institutions participating in a Title IV, Higher Education Act of 1965 program shall be included in the definition of higher education institution for all other purposes of this subchapter.

"Investment Manager" means the Division of Investment in the Department of the Treasury or the private entity or entities authorized to do business in this State as may be designated by the Authority to invest the funds of the trust pursuant to the terms of P.L. 1997, c. 237.

"Member of the family" means, with respect to any designated beneficiary:

1. A son or daughter, or a descendant of either;

2. A stepson or stepdaughter;

3. A brother, sister, stepbrother, or stepsister;

4. The father or mother, or an ancestor of either;

5. A stepfather or stepmother;

6. A son or daughter of a brother or sister;

7. A brother or sister of the father or mother;

8. A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law;

9. A first cousin;

10. The spouse of any individual described in paragraphs 1 through 8 of this definition; and

11. Any other member of the family as defined in or for purposes of section 529 of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 529.

For purposes of this definition, a legally adopted child of an individual shall be treated as the child of such individual by blood.

"NJBEST scholarship" means a scholarship provided by the State of New Jersey for a designated beneficiary's undergraduate attendance at a higher education institution in New Jersey, as more fully described at N.J.A.C. 9A:10-7.15.

"Nonqualified withdrawal" means a withdrawal from an account other than:

1. A qualified withdrawal;

2. A withdrawal made as the result of the death or disability of the designated beneficiary of any account;

3. A withdrawal made on account of a scholarship (or allowance or payment described in subparagraphs (B) or (C) of paragraph (1) of subsection (d) of section 135 of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 135) received by the designated beneficiary, but only to the extent of the amount of that scholarship, allowance or payment; or

4. A rollover or change in designated beneficiary which would not result in a distribution includible in Federal gross income under section 529 of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 529.

"Program" or "NJBEST" means the New Jersey Better Educational Savings Trust Program established pursuant to P.L. 1997, c. 237 and which includes both the NJBEST 529 College Savings Plan and the national 529 College Savings Plan offered by the Authority.

"Qualified higher education expenses" means:

1. Tuition, fees, books, supplies, and equipment required for enrollment or attendance of a designated beneficiary at a higher education institution. Qualified higher education expenses shall also include room and board for a designated beneficiary at a higher education institution provided that the designated beneficiary is enrolled at least half-time (one half the normal full-time work load for the course of study the designated beneficiary is pursuing), and provided that the amount shall not exceed the minimum amount applicable to the designated beneficiary for room and board for such period in the cost of attendance defined by the Higher Education Act of 1965, 20 U.S.C. § 108711, for the higher education institution for such period; and

2. Expenses for special needs services in the case of a special needs beneficiary, who is the designated beneficiary, which are incurred in connection with such enrollment or attendance, as permitted under section 529 of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 529.

"Qualified withdrawal" means a withdrawal from an account to pay the qualified higher education expenses of the designated beneficiary of the account.

"Scholarship account" means a NJBEST account opened by any state or local government (or agency or instrumentality thereof) or an organization described in section 501(c)(3) of the Federal Internal Revenue Code of 1986, 26 U.S.C. § 501, and exempt from taxation under section 501(a) of the Federal Internal Revenue Code for a designated beneficiary as part of a scholarship program operated by such government or organization under which the designated beneficiary need not be identified until such time as a withdrawal is made on behalf of the designated beneficiary who shall receive this interest in the program as a scholarship.

"Subcontractor investment manager" means any financial services firm that has been approved by the Authority and is operating under a subcontract with the Investment Manager approved by the Authority and that is expected to offer accounts with high quality investment options, products and programs subject to the same investment performance standards as apply to accounts offered by the Investment Manager. Any such subcontract may require that substantially all of the accounts in the program managed by a subcontractor investment manager be opened by persons residing outside of New Jersey.

"Successor contributor" means the person designated by the contributor to succeed the contributor in the event of the death of the contributor. The successor contributor would then have the right to continue to maintain the account and to withdraw monies from the account before the account is disbursed to the designated beneficiary.

"Trust" means the New Jersey Better Educational Savings Trust (NJBEST) established under P.L. 1997, c. 237.

N.J. Admin. Code § 9A:10-7.3

Amended by R.1998 d.385, effective 8/3/1998.
See: 30 N.J.R. 1707(a), 30 N.J.R. 2908(a).
In "NJBEST scholarship", changed N.J.A.C. reference.
Amended by R.1998 d.534, effective 11/16/1998.
See: 30 N.J.R. 2805(a), 30 N.J.R. 4041(b).
Rewrote "Higher education institution".
Amended by R.2002 d.289, effective 9/3/2002.
See: 33 N.J.R. 4053(a), 34 N.J.R. 3086(a).
Amended the N.J.A.C. reference in "Higher education association" and "NJBEST scholarship"; amended "Member of the family", "Nonqualified withdrawal", "Qualified higher education expenses" and "Qualified withdrawal"; added "Successor contributor".
Amended by R.2003 d.343, effective 8/18/2003.
See: 35 N.J.R. 1483(a), 35 N.J.R. 3828(b).
Added "Scholarship account".
Amended by R.2004 d.138, effective 4/5/2004.
See: 35 N.J.R. 5532(a), 36 N.J.R. 1777(a).
Added "Subcontractor investment manager".
Amended by R.2004 d.313, effective 8/16/2004.
See: 36 N.J.R. 1656(a), 36 N.J.R. 3880(a).
Rewrote "Contributor" and "Successor contributor"; in "Member of the family" substituted 8 for 9 in 10.
Amended by R.2009 d.180, effective 6/1/2009.
See: 40 N.J.R. 6721(b), 41 N.J.R. 2261(a).
In definition "Program", inserted "or 'NJBEST'", deleted "(NJBEST)" following "Trust", and substituted "c. 237 and which includes both the NJBEST 529 College Savings Plan and the national 529 College Savings Plan offered by the Authority" for "c.237".

Amended by 56 N.J.R. 374(a), effective 3/4/2024