Good afternoon Aunt Joan:
The answer is: It depends. If your state offers a tax deduction for contributions to a 529 plan, there might be a benefit to making a gift into the plan. You'll need to check what plan is being used for his benefit. I'm assuming you are not the owner, but some states do allow third-parties to claim a deduction for contributions to a 529 account they do not own. Again, you can check by looking up your state's plan, clicking "Plan Details," and going down to the tax section.
Unless there is a state tax incentive, the other benefit is that if you gift the money into a 529 plan, it will receive preferential treatment when your nephew applies for federal financial aid. Giving him the money puts the assets into his estate, where it can count against him.
Otherwise, there is little benefit to putting the money into a 529 plan other than convenience, since you don't have the time to take advantage of federal tax-deferred growth.
VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.