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Subject:  The Pennsylvania two-step Date:  7/14/1999  12:35 PM
Author:  Bob78164 Number:  17302 of 127840

I'd like to try this variant on an Education IRA strategy that NaggingFool (I think) quite rightly punctured. Here's the background: My brother (who is my youngest sibling) will turn 30 next February. I also have three sisters, two of whom have daughters. No one is contributing to Education IRAs on their behalf. I've got a son due in October.

My idea is to fund a contribution to my nieces' Education IRAs in 1999 and early 2000. As soon as the 2000 contribution shows up in the brokerage statements, they will transfer their accounts to my brother -- their uncle -- as beneficiary, who in turn will transfer the accounts to my son -- his nephew. This strategy lets us fund an Education IRA with $2000 more than we could otherwise manage. If my brother would only marry a younger woman, we could do even better. ;-)

Assuming that my family will cooperate, does this strategy seem viable? The two-step seems necessary to me because I don't believe that cousins are qualifying relatives. But if there's a simpler way to accomplish my goal, I'd love to hear it. --Bob
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