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Finra Series-6 Exam - Topic 1 Question 105 Discussion

Uncle Scrooge (uncharacteristically) wants to set up a Section 529 college savings plan for his nephew, Louie. If he does so:
D) and Louie decides not to go to college, Uncle Scrooge can name Louie's brother, Huey, as the beneficiary of the plan without any tax consequences.
A) he can contribute at most $2,000 a year.
B) his contributions will be tax deductible.
C) any withdrawals that Louie makes to cover tuition, books, and room and board will be free from both federal and state taxes.

Finra Series-6 Exam - Topic 1 Question 105 Discussion

Actual exam question for Finra's Series-6 exam
Question #: 105
Topic #: 1
[All Series-6 Questions]

Uncle Scrooge (uncharacteristically) wants to set up a Section 529 college savings plan for his nephew, Louie. If he does so:

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Suggested Answer: D

If Uncle Scrooge sets up a Section 529 college savings plan for his nephew Louie, and Louie decides not to go to college, Uncle Scrooge can name Louie's brother, Huey, as the beneficiary of the plan without any tax consequences. Unlike the Coverdell Education Savings Plan, there is no limit to the contribution that can be made, although gift taxes may apply if the contribution exceeds the threshold for gifts. Scrooge's contributions are not tax deductible, and although any withdrawals Louie makes will be free from federal taxation, different states have different rules regarding the taxation of 529 plans.


by Howard at Aug 01, 2025, 04:41 AM

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Cordelia
9 months ago
Surprised to learn about the tax-free withdrawals for room and board!
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Laticia
9 months ago
Totally agree, the tax-free withdrawals are a huge plus!
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Twanna
9 months ago
I love that he can change the beneficiary without penalties!
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Arminda
9 months ago
Wait, are the contributions really tax deductible? I thought they weren't.
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Herminia
9 months ago
You can actually contribute more than $2,000 a year!
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Xuan
10 months ago
I recall that you can change the beneficiary without tax consequences, so D sounds right, but I need to double-check the rules on that.
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Cecil
10 months ago
I’m a bit confused about the tax deductibility of contributions. I thought they weren’t deductible on federal taxes, but maybe I’m mixing it up with something else.
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Jackie
10 months ago
I practiced a question similar to this, and I believe that withdrawals for qualified expenses are tax-free, so C might be correct.
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Lashonda
10 months ago
I think I remember that the contribution limit is actually higher than $2,000 a year, but I’m not completely sure what it is.
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Florinda
10 months ago
This is a tricky one. I'm going to make sure I understand the details of 529 plans before I commit to an answer.
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Kayleigh
11 months ago
Okay, let's see. I think the key is understanding the tax implications of the 529 plan. I'll focus on that and try to eliminate the wrong answers.
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Allene
11 months ago
Hmm, I'm not sure about this one. I need to think it through carefully. Let me re-read the question and options.
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Verlene
11 months ago
I'm pretty confident I know the answer to this one. It's gotta be C - the withdrawals are tax-free.
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Francisca
11 months ago
I think the answer is B because tax deductions are usually a benefit of these types of plans.
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Eve
11 months ago
I'm pretty sure the answer is D.
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Rocco
1 year ago
Hold on, I'm not giving away my money that easily! But if it means Louie can get a good education, I suppose I can make an exception.
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Felicitas
11 months ago
A) he can contribute at most $2,000 a year.
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Malissa
1 year ago
I disagree, I believe the answer is A.
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Staci
1 year ago
I think the answer is C.
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