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Thanks all for the replies.

Yes, I realize that I could take that money out at any time and pay that 10% penalty, but my preference is to not have to pay a penalty for the privilege of accessing my money for a different expense, plus I like the flexibility that I have by not having the money in something earmarked for college only.

I don't know what the OP thinks about using that money for other relatives, and it is good that you have pointed out that you can just change the beneficiary to another relative. For me, I don't consider myself responsible for paying anyone else's college expenses than my own children, and if the money is not used for that, I prefer to reallocate it to something else such as my retirement or the kids' weddings or helping them out with house down payments or other large expense.

This sums up my notions pretty succinctly. LIke I mentioned earlier, the money is a gift that would both educate and aid in the fulfilling of my nephew's (or his brothers' / sisters') future dreams, be that college, starting his own business, etc...

Also what I failed to mention, is that I'd like for any of my family members to contribute to this account as well. As children, my sister and I received bonds from our grandparents for our birthdays until we were 16. When these matured they were a nice gift. This is the same idea with the added bonus of more education and (hopefully) a better return.

As always, thanks for the knowledge.
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