<p>I think the federal gift limit is $13,000 per person ($26,000 if both parents contribute) in 2010. But 529s are treated differently and larger gifts can be made with no gift tax ramifications.</p>
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<p>As far as the difference between a parent-owned 529 and a child-owned 529, the former can have the beneficiary changed while the latter is an irrevocable gift to the child and the beneficiary cannot be changed. To take 2 scenarios:</p>
<p>Scenario 1) open a 529 with the parent as custodian and child #1 as beneficiary. Open another 529 with parent as custodian and child #3 as beneficiary. If child #1 has money left in her account after 4 years of college, the beneficiary can be changed to be child #2. Both 529s are reported on FAFSA as parent assets because the parent is the owner of them both.</p>
<p>Scenario 2) give children #1 and #3 $26,000 each to open 529s in their names. These are called a custodial 529s or a UGMA/529s (assuming children are under 18 or 21, depending on the state). It’s an account that is titled in the child’s name (even if the parent is the nominal custodian) and can only be used for the benefit of child #1/3. If there’s money left, the children can withdraw it, paying the penalties and tax on any gains, but they can’t change the beneficiary of the account to child #2. When child #1 files FAFSA, her 529 is reported on FAFSA as a parent asset (all 529s are reported as parent assets, regardless of whose name they are titled in) but child #3’s 529 is not reported because it’s an asset owned by child #3, not by the parent.</p>
<p>Clear as mud? 
It’s complicated, and the child-owned 529s are somewhat uncommon, but they can be an effective strategy for lowering the FAFSA EFC. For Profile, however, I believe you actually do report sibling assets, along with 529s owned by grandparents etc for the benefit of the child, so something to be aware of.</p>
<p>Two additional points to stress: </p>
<p>1) once you open a UGMA/529, you can’t change its beneficiary.
2) entomom’s point above regarding the asset allocation of age-based 529s is a very good one. Some 529 administrators will automatically allocate assets in their 529s based on the beneficiary’s age. So a child who is within a year or two of college might have their funds weighted more heavily towards short-term bonds and money market funds, while a child who is 8-10 years away from college might be more heavily weighted in their 529 towards equities.</p>