We have grandchildren in college, and we're helping pay their expenses. I fail to see the advantage of putting the money in a 529 plan versus simply 'gifting' the money to the grandchild to be used for tuition and expenses. Neither 529 nor gifting have any tax benefits for me personally, which I think is wrong on the part of our Federal government. So, what is the advantage of the 529 plan over simply 'gifting'?
I am not a USAA Advisor, nor a USAA Employee. I am just a Member like you.
That said, the subject of 529 College Savings Plan for a Child is too complex to give you a simple answer. This forum has Moderators whom are Financial Advisors whom may be better able to answer some your questions.
Everyone should know that using a 529 College Savings Plan for a Child or Simply Gifting Cash to a Child has Gift Tax Implications and as such it is VERY IMPORTANT that you should not gift money (either via a 529 Plan or via Cash) without talking to a financial advisor first.
One of the KEY ADVANTAGES of using a 529 College Savings Plan for a Child is that the value of the 529 account is removed from your taxable estate, yet you retain full control over the account including the right to ask for the money back at any time. No other vehicle affords this combination of control and estate reduction. **(Source: Link #6 below)
Also the only real help I have for you are the following LINKS which should answer some of your questions.
1. USAA - Financial Advice Blog (maybe you could post your question there)
3. IRS - 529 Plans - Questions and Answers **(External Link)
4. IRS - Frequently Asked Questions on Gift Taxes **(External Link)
5. TurboTax - The Gift Tax Made Simple **(External Link)
I hope I have helped you.