Since you're going to claim him on your taxes, the amount taken out for taxes is basically a wash in the end - assuming you have income. I would have him put everything he can either to a 529 or a Roth IRA.
Another bit of advice, if I may: My dad gave me the foundation of "you're allowed to spend 10% of what you make. 90% should go to your college education". This was excellent advice, and looking back I probably wouldn't have done anything different except possibly starting a Roth.
Ultimately, there was two things I wish my dad had done for my financial education - and I can understand why he didn't or why it wouldn't be appropriate - and that was (1) involve me in the actual finances of the home, and (2) show me and teach me about retirement accounts (and HSA accounts, but he had no clue about their existence until 5 years ago - I don't think he had an option of one).
I understood to save as much as I could, but I wish I had understood it better. I was sort of flying blind and learning on my own. Sort of. I wish he had showed me how much he earned, how much the household cost to run, how much I could expect to earn out of college, estimate my expenses, etc. I'd have done things ever so slightly differently. Ultimately I wouldn't be in a different place, but I do wish the education had happened earlier.
