<prompt> Human: I have two nieces that are 2 and instead of buying them gifts at birthdays I want to invest in their future, particularly their education. While I am at it, I being the financial person in my family can convince family members to also invest in my nieces education rather than entirely in short-lived presents.I the account holder and my nieces beneficiaries are residents of Illinois. I am pretty set on the BrightStart direct-sold 529 plan, with a focus on the equity investment sitting at a 0.17 expense ratio 10 annual fee; its the cheapest.nbsp;I am meeting with my tax adviser in a few days to see if she has any reservations, but I think you all are a wealth of knowledge who can also help. Why should I not do this. Here are the factsthings I like about it still a WIP:nbsp;What expenses qualify? nbsp;nbsp;nbsp;nbsp;nbsp; Tuition fees, books, supplies, and equipment computerssoftwareperipherals nbsp;nbsp;nbsp;nbsp;nbsp; Room Board if half-time student limited to actual cost or Universitys Cost of Attendance budget Who can contribute funds? nbsp;nbsp;nbsp;nbsp;nbsp; Anyone - family, friends, corporations, trusts, partnerships nbsp;nbsp;nbsp;nbsp;nbsp; Checks or bank transfers, automatic paycheck withdrawal Who controls the distributionsmoney? nbsp;nbsp;nbsp;nbsp;nbsp;Account Owner; not the beneficiary Can I have two beneficiaries on one 529? nbsp;nbsp;nbsp;nbsp;nbsp; No, only one beneficiary per 529. Although there can be multiple 529s per beneficiary. Who can the 529 be transferred too if not used by the beneficiary? nbsp;nbsp;nbsp;nbsp;nbsp; Relationship to the current beneficiary: sibling, step sibling, parent, step parent, niecenephew, uncleaunt, in-laws, first cousin. What are the annual expenses? nbsp;nbsp;nbsp;nbsp;nbsp; Investment expenses, Program Management Fee, State Administrative Fee nbsp;nbsp;nbsp;nbsp;nbsp; Index Equity Portfolio captures all expenses in the 0.17 expense ratio 10 Account maintenance fee nbsp;nbsp;nbsp;nbsp;nbsp; 10,000 invested for 10 years 317 in expenses What is the withdrawal penalty if not used for education? nbsp;nbsp;nbsp;nbsp;nbsp; Only applies to income earned, not principal invested nbsp;nbsp;nbsp;nbsp;nbsp; If used for non-qualified expenses then State Fed taxes 10 penalty nbsp;nbsp;nbsp;nbsp;nbsp; If beneficiary receives a scholarship, then withdrawal amount equal to scholarship. Pay taxes only, no penalty. nbsp;nbsp;nbsp;nbsp;nbsp; Withdraw funds from 529 in the same year of expenses or face penalties Max contributions? nbsp;nbsp;nbsp;nbsp;nbsp; Annually - none. 14,000 limit for gift tax exclusion per individual. 10,000 limit on IL tax deduction aggregate all 529s nbsp;nbsp;nbsp;nbsp;nbsp; Total - 400,000. Good problem to have Investment optionsChanging? nbsp;nbsp;nbsp;nbsp;nbsp; Change portfolio mix twice a year and with new beneficiary for existing funds nbsp;nbsp;nbsp;nbsp;nbsp; Currently change mix for new funds added nbsp;nbsp;nbsp;nbsp;nbsp; Plenty of investment options with age-blended mix between equities and debt. Focus on equity index to maintain low expense ratio. Frequency of beneficiary change? nbsp;nbsp;nbsp;nbsp;nbsp; Do not know What high education qualifies? nbsp;nbsp;nbsp;nbsp;nbsp; Any accredited institution: Universities, community college, vocationaltrade schools, online education nbsp;nbsp;nbsp;nbsp;nbsp; Any school in United States nbsp;nbsp;nbsp;nbsp;nbsp; 264 eligible schools in IL alone Where is the money held? nbsp;nbsp;nbsp;nbsp;nbsp; Oppenheimer Funds Can benefits be removed by government? nbsp;nbsp;nbsp;nbsp;nbsp; Pension Protection Act of 2006 indefinitely extended tax-free qualified withdrawals nbsp;nbsp;nbsp;nbsp;nbsp; Need more research Affect Financial Aid? nbsp;nbsp;nbsp;nbsp;nbsp; Asset of Parents, beneficiary, or account owner? nbsp;nbsp;nbsp;nbsp;nbsp; How is it recognized by FAFSA? Tax Deductible? nbsp;nbsp;nbsp;nbsp;nbsp; 10,000 per tax payeryear 20,000 filling jointly Illinois residents only State tax only nbsp;nbsp;nbsp;nbsp;nbsp; 14,000 thresholdyear before gift tax and affect lifetime estate tax of 5.49MM Employer Match? nbsp;nbsp;nbsp;nbsp;nbsp; Follow up with employer What Happens if Account Owner moves out of State? Can Owner be switched? What is the withdrawal ratio of principal vs income? Can principal be taken out and earnings left in? Account owner recognize contributions by owners as incomeassets? nbsp;That is my list of questions with any answers I have so far. Im curious as to what everyone else thinks. You can assume that retirement and debt is a non-issue for myself and family members contributing. This is more of a present from myself to the parents to help their future burden, so there is a large qualitative factor here and isnt all numbers.  <response>: Yawn...if you want to start them a college saving account then just do it. 