Most schools in NJ give the PSAT in the fall of junior year. The junior year test also the National Merit Scholarship qualifying test. The PSAT is not a required test for college admissions. It is a practice test that is similar to but a bit shorter and easier than the SAT. We generally recommend taking the test just to see how you would do on an SAT. If a student has tested and has decided that the ACT is better, there is no reason to sit for the PSAT.
The National Merit Scholarship is a prestigious award that is given to students who, among other things, score in the top 1 percent of testers by state. In NJ that means that students have to score exceptionally well to qualify. Typically two mistakes is the maximum number of errors a student in NJ can make and still qualify. The scholarship itself is not much of a help financially as it is $2000 per year for four years.
For students who have the chance to take the PSAT sophomore year, as many high schools do, we encourage students to give it a shot since it is usually the first test that a student will see that is written by the Education Testing Service on behalf of College Board. The scores from the test cannot be used by colleges as it a PSAT and it is a sophomore test so it is literally just for practice purposes.