Account Types
When recommending a 529 education savings plan, what should be explained to the customer?
529 plans: No federal deduction, possible STATE deduction. No income limits. Account owner controls.
Complete Analysis & Legal Rationale
529 plan contributions may be deductible for STATE income tax purposes in many states. There is no federal tax deduction for 529 contributions, but qualified withdrawals are tax-free.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
529 contributions are NOT deductible for federal taxes.
There are no income restrictions for contributing to 529 plans.
The account owner controls the 529, not the beneficiary at age of majority.
Official Standard: Fair dealing obligations in municipal securities activities (verify current text).
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.