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Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 11:32 am
by katnok
I am trying to set up a 529 plan for one of my kids (US citizens). After reading here and elsewhere, I have decided to open a Utah 529 plan, but seems like I have already hit a roadblock.

One of the questions in the process asks "Are you a US Citizen/Resident Alien". I couldn't proceed any further without answering "yes" to this question, but I am not sure if that's the answer.
For tax purposes, I am a "resident alien", but a "non-resident alien" (in line for a "green card") for immigration purposes.

Does anyone have any idea as to which definition applies here?

Your help will be much appreciated.
Thank you.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 11:57 am
by sscritic
One answer from google and the web:
If you are on work visa in USA you are a resident alien and not a Non-
Resident Alien. Dont confuse resident alien with green card. You can
do any kind of passive investing within the law if you are a resident
alien meaning you reside in US and have a lawful job.

Same applies for stock investing, IRA, roth-IRA etc. To be extra
certain you can contact the broker through whom you plan to get 529.
http://www.accountantforums.com/can-non ... 17073.html

Don't overlook the last line: call the Utah plan and ask. Wait three days and call again. If the answer is not the same as the first answer, ask to speak to a supervisor.
Here is another google result:
Can a non-U.S. citizen open a 529 account?

Yes, with a few limitations. Section 529 plan account applications generally ask for the Social Security number of the account owner and the beneficiary. If you will be the account owner and you don't have a Social Security number, check with the administrator of the 529 plan before you send any money to see how you'll be handled. Some 529 plans allow resident aliens to be the account owner, but normally these plans still require a Social Security number.
http://www.360financialliteracy.org/Imp ... 29-account

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 12:32 pm
by katnok
sscritic wrote:One answer from google and the web:
If you are on work visa in USA you are a resident alien and not a Non-
Resident Alien. Dont confuse resident alien with green card. You can
do any kind of passive investing within the law if you are a resident
alien meaning you reside in US and have a lawful job.

Same applies for stock investing, IRA, roth-IRA etc. To be extra
certain you can contact the broker through whom you plan to get 529.
http://www.accountantforums.com/can-non ... 17073.html

Don't overlook the last line: call the Utah plan and ask. Wait three days and call again. If the answer is not the same as the first answer, ask to speak to a supervisor.
Here is another google result:
Can a non-U.S. citizen open a 529 account?

Yes, with a few limitations. Section 529 plan account applications generally ask for the Social Security number of the account owner and the beneficiary. If you will be the account owner and you don't have a Social Security number, check with the administrator of the 529 plan before you send any money to see how you'll be handled. Some 529 plans allow resident aliens to be the account owner, but normally these plans still require a Social Security number.
http://www.360financialliteracy.org/Imp ... 29-account
sscritic, thank you for the links, but I have already googled my question and came across the above info. The first link does answer my question, but I am not sure how accurate the info is. As to the other link, a non-US citizen can be either a resident (i.e a green card holder or permanent resident) or non-resident alien (some one like myself who is on work visa). Again, these definitions are immigration related.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 12:40 pm
by sscritic
I don't always trust the web either, so if you want to know if Utah will let you open a plan, you have to call Utah, at least once if not twice. At least that is what I would do if it were I.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 12:44 pm
by sscritic
P.S. I also tried reading 26 USC 529 and the relevant sections of 26 CFR, but I couldn't find any references to alien or resident. The real issue may be whether you have a SS number or another form of TIN (you do), as mentioned in the second reference, not whether you have a green card.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 12:48 pm
by Spirit Rider
I think sscritic has given you the relevant information. 529 is section of the federal tax code. For IRS purposes you are considered a resident for tax purposes. Your immigration status and your tax status can be different. The information provided clarify this.

529 regulations, 401k regulations, etc... provide what plans "may" due. However, the plans themselves may have administrative rules that erect barriers. The only true answer here is for you to contact the provider of the UTAH 529 plan.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 12:50 pm
by katnok
I will give them a call sometime this coming week.
Thank you, sscritic and Spirit Rider.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 1:04 pm
by yogesh
Spirit Rider wrote:I think sscritic has given you the relevant information. 529 is section of the federal tax code. For IRS purposes you are considered a resident for tax purposes. Your immigration status and your tax status can be different. The information provided clarify this.

529 regulations, 401k regulations, etc... provide what plans "may" due. However, the plans themselves may have administrative rules that erect barriers. The only true answer here is for you to contact the provider of the UTAH 529 plan.
Yes. SSN is required with tax status as resident as you are opening a tax deferred account abiding to Max contribution limits and sticking to girt tax rules.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 2:06 pm
by HueyLD
..............

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Sun Oct 20, 2013 5:57 pm
by katnok
HueyLD wrote:
I found a 529 application form from Scholarshare 529 plan ( http://www.csustan.edu/hr/Apps-Forms-Po ... cation.pdf ) and it asks two questions regarding residency:
Thanks for the above link, HueyLD. This makes it a bit clearer that I might be able to open a 529 plan. But, I will still speak with the plan administrator.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Mon Oct 21, 2013 6:14 pm
by katnok
Update:
Called the customer service of Utah plan, and they told me that I am a resident alien for the purpose of opening a 529. So, the problem has been solved.
Thank you all for trying to help me.

Re: Am I a resident or non-resident alien for a 529 plan?

Posted: Mon Oct 21, 2013 6:17 pm
by sscritic
Glad it worked out for you.