Question for the Money Doctors
Question submitted on Dec 21, 2012.
QuestionFor the 529 plan for the college. If I open account for my daughter. She is 7 years old. When it is time she is going to college. Her college is not in US but other country like Asia or Europe. Can she still use the money? Both of us is working on the education industry. It is likely that she might be go to college free or reduction tuition rate. In this case can we use the money for other purpose? Not for tuition but for living in the college.
There are many 529 plan-eligible overseas institutions as determined by the US Department of Education. Currently, 452 are listed and can be found by searching at the following link (choose “Foreign Country” in the State drop-down field):
Because there are multitudes of different 529 plans, it is best to check with your advisor to see if your specific plan allows out-of-country institutions and if it will cover costs other than tuition, such as room and board.
If you withdraw the money for any purpose other than allowed by the plan, you will pay income tax on the earnings and penalties. If you deducted any contributions on your state tax returns, you may have an income recapture item as well.
For additional information visit http://www.360financialliteracy.org/