Introduction
Welcome to Municipal Fund Securities, a unique category of investments issued by state and local governments that help individuals save for education and disability-related expenses.
Exam Weight: Part of 33 questions (44% of exam), Products & Risks chapter
What You'll Learn
- What municipal fund securities are, who regulates them, and the three product types under MSRB Rule D-12
- The two types of 529 qualified tuition programs and how they work
- How 529 contributions, tax-free growth, qualified withdrawals, and superfunding work
- Who controls the account and how 529 plans differ from custodial accounts
- Qualified vs. non-qualified withdrawals, penalty exceptions, and Roth IRA rollovers
- Fee structures, share classes, and MSRB disclosure rules for direct-sold vs. adviser-sold plans
- How local government investment pools work as pooled vehicles for government entities
- How ABLE accounts provide tax-advantaged savings for individuals with disabilities
Why This Matters
Municipal fund securities (especially 529 plans) are among the most widely used tax-advantaged savings vehicles in the country. The SIE exam tests how these products work, their tax treatment, and the regulatory framework governing their sale. You will need to know the differences between 529 savings plans, prepaid tuition plans, and ABLE accounts.
Let's start with an overview of what municipal fund securities are and how they're regulated.