If I understand this correctly this approach seems far superior to the 5-year option. Procedure:
1. Contribute $14k/kid to the 529 plan
2. Contribute $14k/parent and $14k/grandparent to 529 and later change the beneficiary to the appropriate kid. If necessary gift money to grandparents so they aren't out the dough
Using this procedure you'd get the same effect as you would using the 5-year rule:
-$14k for the kid in the applicable tax year
-$14k from mom
-$14k from dad
-$14k from grandma
-$14k from grandpa
So that still totals $70k and you don't have to defer your contributions for 5 years if for whatever reason you wanted to throw more in the next year.
Accurate?
This, of course, begs the question about where it ends. What's to keep you from using the same procedure from great grandparents, family friends, business partners, or whoever else? There has to be a logical end to this. Right?
Another question is what could you do with the money if the accounts end up being over-funded after the kid finishes their education? What all can the funds be used for without tax penalties?
Just so we aren't crossing wires...You are able to gift $14k to as many individuals as you want, so:
Dad: $14k for kid 1, $14k for kid 2, $14k for kid 3. So, $42k to your kids
Mom: $14k for kid 1, $14k for kid 2, $14k for kid 3. So, $42k to your kids
That gets you $84k just with mom and dad
Grandma can toss in $42k, Grandpa can add $42k, uncles, aunts, etc. If the kids happen to have assets, they can contribute to their own 529 and to their siblings. You can easily shovel a ton of money into 529s. It ends at $300k per 529 (which is the max investment).
And the money coming out (tax free) just needs to be qualified education expenses: tuition, fees, books, room, board. Undergrad, grad, switch beneficiaries to a sibling, cousin, future grandkids, or even some classes for yourself. If the kids get a bunch of scholarships, then you can take similar amount out, penalty free. Lots of flexibility.