New Jersey § 54a:6-25

§ 54a:6-25.

a. Gross income shall not include earnings on a Coverdell education savings account,

a qualified tuition program account, or a qualified ABLE account until the earnings are distributed

from the account, at which time the amount of the distribution attributable to earnings on the account and the amount

of the distribution attributable to contributions allowed as a deduction pursuant

to section 3 of P.L.2021, c. 128 ( C.54A:3-12 ) shall be includible in the gross income of the distributee except as provided in

this section. b. Gross income shall not include qualified distributions as defined in paragraph

(3) of subsection c. of this section. c. For purposes of this section: (1) “ Coverdell education savings account ” means a Coverdell education savings account as defined pursuant to paragraph (1) of subsection (b) of section 530 of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.530 . (2) “ Qualified State tuition program account ” means an account established pursuant to the “New Jersey Better Educational Savings

Trust (NJBEST) Program,” ( N.J.S.18A:71B-35 et seq. ) or an account established pursuant to any qualified tuition program, as defined pursuant to subsection (b) of section 529 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.529 or a tuition credit or certificate purchased pursuant to any such program. (3) “ Qualified distribution ” means any of the following: (a) a distribution from a qualified tuition program account that is used for qualified higher education expenses as defined

pursuant to paragraph (3) of subsection (e) of section 529 or a distribution from a qualified ABLE account that is used for qualified disability

expenses as defined pursuant to paragraph (5) of subsection (e) of section 529A of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.529 or 529A ; (b) a rollover from one account to another account as described in clause (i) of subparagraph (C) of paragraph (3) of subsection (c) of section 529 , clause (i) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A , or paragraph (5) of subsection (d) of section 530 of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.529 , 529A , or 530 ; or (c) a change in designated beneficiaries of an account as described in clause (ii)

of subparagraph (C) of paragraph (3) of subsection (c) of section 529 , clause (ii) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A , or paragraph (6) of subsection (d) of section 530 of the federal Internal Revenue Code

of 1986 , 26 U.S.C. s.529 , 529A , or 530 ; and (d) any other transfer involving a qualified ABLE account which is a qualified distribution

for the purposes of section 529A of the federal Internal Revenue Code , 26 U.S.C. s.529A . (4) “ Qualified ABLE account ” means an account established pursuant to P.L.2015, c. 185 ( C.52:18A-250 et al.) or an account established pursuant to any qualified State ABLE Program established

pursuant to section 529A of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.529A . d. The portion of a distribution from a Coverdell education savings account, a qualified

ABLE account, or a qualified tuition program account that is attributable to earnings and the amount of the distribution attributable to contributions allowed as a deduction

pursuant to section 3 of P.L.2021, c. 128 ( C.54A:3-12 ) shall be determined in accordance with the principles of section 72 of the federal Internal Revenue Code of 1986 , 26 U.S.C. s.72 , as applied for purposes of sections 529 , 529A , and 530 of the federal Internal Revenue Code of 1986 , 26 U.S.C. ss.529, 529A, and 530.