We may emigrate overseas, and there is a possibility that my daughters may not attend higher education in the U.S. If that is the case, can 529 funds be used overseas, or would I need to withdraw the funds and incur the penalties? — James M.

Many overseas institutions are eligible under the 529 rules, according to Joseph Hurley, a CPA and founder of Savingforcollege.com. You can search a list of eligible institutions provided by the U.S. Department of Education at the Federal Student Aid website (https://fafsa.ed.gov/FAFSA/app/schoolSearch). Under the "State" tab, select "Foreign Country" and hit "Search." You'll find about 450 school listed, ranging from Aarhus University in Denmark to York University in Toronto.

If an international institution qualifies for 529 funds, you can use your plan to cover tuition, mandatory fees, and — if your plan allows — other costs such as room and board. Not all 529 plans are created equal, however, and if you have a pre-paid 529 plan (as opposed to a 529 savings plan) you may not be able to apply the full value of the plan to out-of-state — or out-of-country — institutions.

If you do decide to withdraw the money from your plan to use for a non-eligible institution, or for non-eligible expenses, you will have to pay income tax and a 10% penalty on any earnings you withdraw.

— Austin Kilham

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