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I am an Indian citizen and currently reside in the USA with a student visa (F-1) along with my wife (F-2). Like a couple of months ago we are blessed with a baby boy. Now that he was born in the USA, he became an US Citizen. I am not sure how long we can stay in the US based on current immigration rules and pandemic situation. Even if we go back to our home country, India, we may or may not be returning back to the US.

My current assents include:

  1. IRA account (around 20k USD) - TD Ameritrade
  2. Savings account (around 25k USD)
  3. Stock brokerage account (3k USD)

Before I go back to my country, I would like to invest in something (even small or large) in the US that could be helpful for my kid in his future endeavors, once he decides to come to US for further education or to move completely. At this very moment, as a parent, all I want is to provide a better and financially secure future for him. Can someone please recommend best possible options for achieving my goal for him?

Update: I have read about Uniform Transfers to Minors Act (UTMA), but not quite understood the concept of: the assets will be counted as part of the custodian's taxable estate until the minor takes possession. If I move out of the country, how I can pay taxes for the money? And how can I get tax filings each year?

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  • Before you start financial planning, you should figure out the citizenship status of your son. He is a US citizen but also a citizen of India, and while the US has no problems with dual citizenship, India very much does. To continue as a citizen of India past age 21, your son will need to go to a US Consulate and formally renounce his US citizenship. More immediately, you need to figure out your son's passports and visas, perhaps having your son enter India with an Indian passport issued by an Indian consulate and having his US passport tucked away in your bag for future needs.
    – Dilip Sarwate
    Jul 18, 2020 at 20:04
  • Not sure if I need to apply for Indian passport, but I have already applied for US passport. Can you please share me the citations that say - US born Indian needs Indian passport along with a US passport?
    – Austin Evans
    Jul 19, 2020 at 17:40
  • A US-born adult of Indian origin cannot hold an Indian passport and a US passport as per Indian law (the US does not care) but a child might be permitted to do so (I don't know). The point is that your baby boy will need to apply for an Indian visa on that US passport to enter India with that as the sole identifying document, and most Indian visas entitle the person to stay for relatively short periods of time whereas your son effectively must apply for a permanent immigrant visa on that US passport. Or get an Indian passport as well if that is allowed while he is a minor.....
    – Dilip Sarwate
    Jul 19, 2020 at 20:03

1 Answer 1

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The two main investment options for minors are:

The main difference between the two is the tax status. UTMAs are taxable and therefore largely unrestricted as to what investments can be made while 529s are tax-advantaged and therefore have restrictions on how the money is invested and withdrawn.

Those options would have to be evaluated for their impact for your family immigration, visa, and citizenship status.

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  • I read this for UTMA/UGMA: "Note that, while the UTMA offers a way to build a tax-free savings account for minor children, the assets will be counted as part of the custodian's taxable estate until the minor takes possession." What exactly that mean? What if I am no longer in the US?
    – Austin Evans
    Jul 14, 2020 at 17:59
  • If possible, can you provide some insights on both in more simpler wordings? An example/scenario would be much appreciated. Thank you.
    – Austin Evans
    Jul 14, 2020 at 18:02

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