529 plan question (Generation skipping)

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529 plan question (Generation skipping)

Post by smee44 » Thu Oct 05, 2017 3:30 pm

I want to start a 529 to take the MN state tax deduction on $3000 of 529 contributions. My wife and I don’t have children at the current time but may in the future. We already max 401ks, backdoor Roth IRAs & HSA accounts and contribute to taxable. We are in the MN marginal income tax bracket of 7.85% and flirting with the 9.85% line with bonuses.

My question is related to generational skipping rules. Would I benefit from creating the account with my nephew as the beneficiary instead of my wife? Then if we have children I could switch it to them and then possibly grand children from there without any generation skipping issues.
I believe you can get around the generational skipping rules if you stay within the gift tax amounts also, but correct me if I am wrong on that.

Am I overthinking it and should just create it with my wife or I as the beneficiary and figure out the generational issues if they come up as that will mean things likely are going very well?

Note: If we don’t have children I am would plan to use the money for nieces and nephews education expenses.

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