A recent rule allows up to $35,000 from a 529 plan (open for 15+ years) to be rolled into a Roth IRA for the beneficiary. This mitigates the risk of over-saving and provides a powerful retirement head start.
While custodial accounts (UGMA/UTMA) can be used for any expense benefiting a child, they have a major risk: the child gains full, unrestricted control of the assets at the age of majority (18 or 21), regardless of parental wishes.
The IRS allows a special provision to contribute up to five years' worth of gift-tax-exempt funds (e.g., $95,000) into a 529 in a single year. This tactic front-loads the account to maximize the time for tax-free compounding.
You are not restricted to your home state's 529 plan. While some states offer residents a tax deduction, many do not, making it advantageous to shop out-of-state plans for lower fees and better investment options.