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Official Practice ProblemFINRA Series 7 Blueprint: Function 1
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Question #s7-prep2-s7-q-248Function 1Fundamental

Account Types

Which of the following is TRUE about 529 education savings plans?

Correct Choice: C

529 key benefit: Tax-FREE qualified withdrawals for education expenses.

Complete Analysis & Legal Rationale

Qualified distributions from 529 plans for education expenses (tuition, room, board, books) are completely tax-free at the federal level and usually at the state level.

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:

Choice AIncorrect
Concept Trap

There is no federal tax deduction for 529 contributions.

Choice BIncorrect
Concept Trap

There are no income limits for 529 contributions.

Choice CCorrect
None

Matches the verified teaching point in the explanation.

Choice DIncorrect
Concept Trap

The account owner (parent) maintains control regardless of beneficiary age.

Authorities & References:

Official Standard: Fair dealing obligations in municipal securities activities (verify current text).

Official SourceMSRB MSRB Rule G-17 — Conduct of Municipal Securities and Municipal Advisory Activities

Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.

Official SourceFINRA FINRA Series 7 Content Outline — General Securities Representative Examination (Series 7) Content Outline
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Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #s7-prep2-s7-q-248 (FINRA Series 7 Content Outline)

To pass the FINRA Series 7, candidates must understand not just the calculation formulas, but the exact federal securities acts, SRO rulebooks, and statutory frameworks that enforce them. Review the primary authority records below:

MSRBMSRB Rule G-17— Conduct of Municipal Securities and Municipal Advisory Activities

Fair dealing obligations in municipal securities activities (verify current text).

Read MSRB Official Rule
FINRAFINRA Series 7 Content Outline— General Securities Representative Examination (Series 7) Content Outline

Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.

Read FINRA Official Rule

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