<p>Sigh, Swimcats, I KNOW THAT. But for wealthy parents, it is a better estate tax play than 529 – which do NOT get estate tax exclusion. But back to OP, if they can not fund BOTH 401 and 529, I suspect they are shorting retirement, even if they do not know that. I would suggest fully fund 401, BEFORE any 529. Kids may have less $$$ available. Thats life.</p>