529 Plans For Expats

As I have previously discussed, 529 college savings plans can be a powerful vehicle to finance higher education, however, there are additional considerations for U.S. expatriates. 

529 plans are established in a specific U.S. state under that state’s rules as well as federal rules.  To establish a 529 account, many plans require the account holder have a U.S. residence at the time the account is established.  If you plan to move overseas, it is recommended you establish 529 plans before leaving the U.S.  Yet, if you are already living overseas you may consider having a trusted family member create the account for the benefit of your children.  This could mitigate any negative tax treatment of the account in a foreign jurisdiction.  Remember, the account holder has the right to change the beneficiary or to surrender the holding of the account to someone whom you did not elect. 

Many non-U.S. based educational institutions are eligible for 529 withdrawals, but if the beneficiary decides to attend a college that does not qualify, the 529 plan can be used for another family member.

See Jonathan Lachowitz, Ask an Expert: Tips for U.S. Expats Using 529 College Savings Plans, The Wall Street Journal, Jan. 5, 2015.