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Using Fidelity 529 for College Expenses Outside the U.S.



 Does your student have their sights set on the University of Oxford, a semester in Barcelona, or a medical degree in Canada? One of the most common misconceptions about the Fidelity 529 is that it’s "locked" to the United States.

In reality, your 529 is a global passport. As of late 2025, the rules for international study are more flexible than ever, but you need to know which expenses "fly" with the IRS and which ones stay grounded.

1. The "Title IV" Checklist

For your Fidelity 529 withdrawal to be tax-free, the international school must be an "Eligible Educational Institution."

  • How to tell: The school must participate in the U.S. federal student aid program (Title IV).

  • The Scope: There are currently over 400 foreign universities that qualify. This includes giants like the University of Toronto, University of Melbourne, London School of Economics, and the American University of Paris.

  • Quick Search: You can verify any school in seconds by looking up their Federal School Code on the Federal Student Aid website. If they have a code, your Fidelity 529 is good to go.

2. Study Abroad vs. Full Enrollment

The way you use your funds depends on how the program is structured:

  • Study Abroad (U.S. University): If your child is enrolled at a U.S. school (like NYU or Texas A&M) and spends a semester in Tokyo, the process is simple. You pay the U.S. school, and since they are eligible, all tuition, room, and board are qualified.

  • Full Degree Overseas: If your child is getting their entire degree from a foreign university, you can withdraw funds from your Fidelity account to pay the school directly or reimburse yourself. Just ensure you keep the receipts and the school's Federal Code for your 2026 tax records.

3. What’s Covered (And What Isn't)

The IRS is strict about "qualified" expenses when crossing borders. Use this 2025/2026 cheat sheet to avoid penalties:

Qualified (Tax-Free)Non-Qualified (Taxable + 10% Penalty)
Tuition & Mandatory FeesAirfare & Travel Costs
Books & Required SuppliesInternational Health Insurance
Room & Board (if enrolled half-time)Cell Phone Plans & Data
Computers & SoftwareWeekend Tourism & Excursions

Critical Tip for 2025: If your student lives in an off-campus apartment in London or Sydney, you can use 529 funds for rent and groceries, but only up to the "Cost of Attendance" (COA) allowance published by the school. Anything above that COA is considered a non-qualified withdrawal.

4. Managing the Exchange Rate

Fidelity typically issues 529 withdrawals in U.S. Dollars (USD). When you pay a bill in Euros or Yen, the exchange rate matters.

  • Timing is Everything: Reimburse yourself in the same calendar year you pay the expense.

  • Paper Trail: Keep a log of the exchange rate on the day of payment. If you withdraw $5,000 to pay a €4,600 bill, you must be able to prove that the conversion was accurate on that specific date to avoid "over-withdrawing."

5. The "Backup Plan" (Roth IRA Rollover)

What if your child stays abroad, gets a scholarship, or decides not to finish their degree?

  • In 2025, you can roll over up to $35,000 of unused 529 funds into a Roth IRA for the beneficiary (provided the account has been open for 15 years). This ensures that even if their international academic journey changes, the money remains a tax-free asset for their future.

The Bottom Line

A Fidelity 529 is a powerful tool for the global student. By sticking to Title IV-eligible schools and budgeting separately for airfare, you can provide your child with an international education using years of tax-free growth.

Would you like me to help you look up the Federal School Code for a specific international university you're considering?

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