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They explained it much like some of the posts here. By moving the money from her savings account (I am custodian) to the 529 I have set up, it would essentially by her giving money to me. They (like the previous post) suggested I talk to a tax attorney for actual legal advice. What I came away from that discussion was that it "could" be consider her 'gifting' the money to me--though it would be put into an account for her benefit.

As the previous reply noted, a 529 can be used for any purpose. However, there are penalties associated with using a 529 for other than qualified education expenses.

The problem with DD gifting the money to you to place in a 529 for her is that she is "incapable" of making that gift. That is, she doesn't have the legal capacity to make a gift.

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