Stephan,

A 529 plan is considered an asset of the adult (usually the parent) and the child is the beneficiary. The adult retains control and can change the beneficiary if they wish. Any adult over age 18 can open a 529 and even list themselves as beneficiary. There is no age limit on the beneficiary. So, in theory, if you planned to go to graduate school in a couple of years you could open a 529 for yourself.

529 plans are great for gifting assets out of an estate. You can even "front load" 5 years worth of gifts or $60,000. The donor can't give any other gifts to the beneficiary for 5 years and they must live for five years or the amount gets pro-rated back into their estate. When you change the beneficiary, there should be no federal income tax due although there could be federal gift due (particularly if you change a generation).

There is no state tax advantage for a Massachusetts resident to use the MA plan. Depending what state your wife's grandmother is in, she might receive a benefit for using her state's plan. It's worth checking out. The Utah plan is one that is frequently recommended for low fees and decent performance.

Take a look at www.savingforcollege.com for tons of 529 info and give the Utah plan a call to verify any additional issues. Good Luck! Susan, CFP

Zip Code: 01801