An October Motley Fool article said, regarding Education IRAs: "there is no reason that Grandpa can't give a $500 gift to little Johnny. Johnny can then turn around and open his OWN education IRA account for the full $500, since Johnny is well under the income limitations." Maybe I'm too conservative, but this seems like tax fraud to me. Isn't the contribution really coming from Grandpa (who is over the income limits, in the example)? Why couldn't everyone who exceeds the income limits just get around them by giving their little Johnny $500 and then Johnny ostensibly makes the Education IRA contribution?