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WilliamLipp writes (in part):

The insurmountable difference between these two examples, in my opinion, is the issue of whether be really gave the money to his neices. If he did, then they were free to do anything they wanted with it.

I reply:

A fair comment. Let me try the following example, which is routinely endorsed on this board and (as far as I know) has not been criticized by anyone. Assume that my income is too high to make an Education IRA contribution for the benefit of my son, and I don't want to deal with the hassle of having him fund his own Education IRA. So I find a willing and eligible relative (say, my sister), to whom I give $500 with the expectation that she will, in turn, fund my son's Education IRA to the tune of $500 (but not the legal obligation to do so). Is the "sham" aspect of this transaction any different from my proposal? --Bob
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