There’s a lot of talk about this on both earlyretirement.org and bogleheads.com.
For folks with extra bandwidth in their savings – it’s a good way to start transferring their wealth ahead of time. Much of the discussion is about kids in late high school, college, and the first years out of college… Not elementary school age kids.
The downside – if you need the money later, you can’t claw it back – it’s owned by the kid. So lets say you live on the jersey shore and the beach erosion takes your life savings in gold, out to sea, because you buried it in your yard… you might want to get your hands on the money you gave your kid. You can’t.
I like 529’s for college funds because they remain in the ownership of the parent… so if the kid turns out to have goals that don’t involve college, you can redirect the funds to other kids, or to your own educational goals… or even college for the grandkids.
But for strict transfer of wealth – if you have a lot of excess are your kids really going to be working during high school and college. I hear so many folks (who aren’t that wealthy) talking about how they don’t want their kids working during college so they can focus on their studies… (btw – spare time of college students does not get converted to studying, it gets converted to partying.) No earned income, no Roth.
My savings goals are more directed at my early retirement goals and funding the kids college. I don’t have enough extra, beyond those goals, to fund my kids retirement. If there’s extra money when my goals are funded, I’ll consider it.
