I have a few 529 questions. I may not have kids but would like to open a 529 now for the state tax deduction.
1) Could i designate my oldest member of my family as a beneficiary then get the 10% penalty waived?
Not sure how the age of the beneficiary affects the penalty, unless you're suggesting you would designate an elderly person as beneficiary in hopes that they would die soon. If that's your plan, be aware that the penalty is only waived if the distribution is paid to the deceased beneficiary or their estate (source:
IRS Publication 970). Maybe if you can convince them to write you into their will...
2) Alternatively could I pay for a 1 week course in paris or something and also expense hotel and use this as a vacation fund much later?
If this is arranged through an
eligible educational institution (pretty much any accredited US university, plus some foreign ones), the tuition and any required fees, books, and supplies could be a qualifying expense. Reasonable room and board expenses can also qualify if you're at least a half-time student. Other travel expenses generally wouldn't count.
3) Could I make my brother's kid the beneficiary and then have him pay me so I unlock my cash
Maybe? Seems shady. What's in it for him? Note that there are rules against double-dipping between 529 withdrawals and educational tax credits, so this would only maybe be an option for the portion of his expenses that exceed the maximum you can claim for those credits, and even then I wouldn't really advise someone to try this.
For me personally, my thoughts on what I might do if my kids don't use their full 529 is to do one of these two things:
1) Take some classes myself at a local community college, enough to qualify as a half-time student. I would then be able to take out the tuition plus reasonable room and board charges tax-free.
2) Let the money ride for any grandkids I might have. It has already been set aside for education; if the intended recipient doesn't need it, maybe their kids will.