BACKGROUND
- We have a 529 plan set up for our son that is just shy of $10,000. The plan is with Vanguard and is sponsored by the state of Nevada. The state we lived in at the time of setting up the plan is Kansas, which is where we still reside.
The plan is worth just over $7000 and we have contributed $5250.
Our son (12 years old) is a US citizen, so presumably he would have the ability to attend university on either side of the border without visa limitations.
My research shows that 529 funds can be used to pay for qualified educational expenses at most Canadian universities.
Concerning our retirement investments, we will likely transfer our TIAA-CREF 403b and Vanguard IRAs to a traditional or roth IRA at a cross-border-friendly brokerage such as TDAmeritrade. We are not considering moving our retirement funds to Canada due to tax complications, and because a portion that is invested in the TIAA traditional fund will have to remain with TIAA. Our plan is simply to consolidate what we can, preferably at a brokerage which allows us to rebalance and/or contribute as Canadian residents.
- Should we leave the 529 plan where it is at Vanguard? My understanding is that we would no longer be able to contribute to it as residents of Canada. It is unclear to me whether Vanguard will even allow us to hold such an account.
Assuming that we end up parking our retirement funds with TDAmeritrade, should we transfer the 529 plan to TDAmeritrade as well?
Should we close the 529 account, withdraw the funds, and reinvest in Canada? My understanding is that there is a 10% penalty on the earnings, plus tax owed.