Introduction

Welcome to Retirement Plans and Tax-Advantaged Accounts: one of the most detail-heavy units on the Series 7, covering the plan types, contribution limits, distribution rules, and tax treatment you need to recommend the right retirement strategy for every client.

Exam Weight: Part of 9% (~11 questions)

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What You'll Learn

In this unit, you'll cover:

  • Qualified vs. Non-Qualified Plans: The foundational framework that determines tax treatment, creditor protection, and employer obligations
  • Defined Benefit Plans: Employer-funded pensions with guaranteed retirement income
  • Defined Contribution Plans: 401(k), 403(b), profit-sharing, and money purchase plans with their 2026 limits
  • Employer Stock Plans: ISOs, NQSOs, and employee stock purchase plans
  • Section 457 Plans: Deferred compensation for government and tax-exempt employees, with no early withdrawal penalty
  • Non-Qualified Deferred Compensation: Executive compensation programs and rabbi trusts
  • Individual Retirement Accounts: Traditional and Roth IRAs, contribution limits, phase-outs, and permissible investments
  • Employer-Sponsored IRAs: SEP-IRAs and SIMPLE IRAs for small businesses
  • ERISA Requirements: Vesting schedules, fiduciary duties, and top-heavy plan rules
  • Transfers, Rollovers, and Distributions: Direct vs. 60-day rollovers, RMDs, and early withdrawal penalty exceptions
  • Education Savings Accounts: Coverdell ESAs and 529 plans, including the SECURE 2.0 Roth rollover
  • Taxation of Retirement Distributions: Pro-rata rule, NUA, and how each account type is taxed

Why This Matters

Retirement plans are central to a registered representative's practice. Clients rely on you to understand the differences between plan types, navigate contribution limits, and avoid costly distribution mistakes. The exam tests specific dollar thresholds, penalty exceptions, and tax treatment distinctions: the kind of detail that separates a correct answer from a trap.

Let's start with the foundational distinction that drives everything else: qualified vs. non-qualified plans.