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Tag Archives: FINRA

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Securities Exams: What You Should Know about the “Tax Cut and Jobs Act” of 2017

The new Act made changes in income tax, gift tax, and estate tax laws, but most of these rules will not be tested.  Here are the changes that may affect questions in the securities exams:


  • The kiddie tax will continue to be imposed on the unearned income of a child under 19 years of age or up to age 24 if a student. The tax was previously calculated using the parents’ income tax bracket, but the Act changed the calculation to use new estate and trust income tax brackets.


  • Under the Act, most income tax rates have been reduced a small amount. For example, the top rate was previously 39.6%, and under the new law the top rate is 37%.  Long term capital gains and qualified dividends are still taxed at the preferential rates of 0%, 15%, and 20%.  In the past the rates at which capital gains and dividends were taxed lined up with the income tax rates, so for example, the 20% rate was applied to taxpayers in the top bracket.  Under the new law, the income tax brackets and capital gains breakpoints no longer are aligned, so the 20% capital gains rate applies to the top income bracket and to part of the income bracket below it.


  • 529 plans have been used in the past to pay for qualified education expenses at institutions of higher learning. The Tax Act has changed the definition of “qualified higher education expenses,” so the money in a 529 plan can be used to pay for up to $10,000 of tuition per student at elementary and secondary public, private, and religious schools.  Parents can still “front load” a 529 plan by contributing in the first year of the plan up to 5 times the annual gift tax limit of $15,000 ($30,000 for both parents).


  • The new Act doubled the standard deduction, but this improvement was offset by elimination of the personal exemption and by imposition of some new limits on itemized deductions. Taxpayers in some states were particularly affected by the $10,000 limit placed on the combined total amount of state and local income taxes and property taxes that can be deducted. These changes as well as the increase to the Alternative Minimum Tax (AMT) exemption will also mean a reduced number of taxpayers who will be paying AMT next year.


  • Under prior law, investment advisory fees were tax deductible as miscellaneous itemized deductions subject to a 2% of AGI floor. The new law has suspended these deductions.


  • Although there was some discussion of eliminating the estate tax, Congress instead doubled the estate and gift tax exemption from $5.6 million to $11.2 million in 2018. The annual exclusion will increase to $15,000 for 2018 due to indexing, but the Act did not make this change.


Congress discussed a new rule that would require stockholders to sell their shares of stock in the order in which they bought them, but this change was not adopted.  A proposal to reduce the maximum contributions to retirement plans was also not in the final act.


Changes to the Series 6, 7, 22, 57, 79, 82, and 99

On October 1, 2018, FINRA will begin administering the new Securities Industry Essentials (SIE) exam.  The exam will cover only the fundamentals of the securities industry, including the structure of the industry, how the industry functions, and the agencies that regulate the industry.  This general knowledge material will no longer be tested in the exams listed above and will now be tested only once in the SIE exam.   To be fully licensed, a candidate will complete the SIE exam and one of the specialized exams listed above.  Yes, that’s two exams now, instead of one!


Students who want to take the SIE exam will open an “exam window” at the time they register.  After opening the window, they will have 120 days to take the exam at a Prometric Center.  The exam will consist of 75 questions, and students will be given 105 minutes to complete the exam.  A student will receive a pass/fail grade and may receive additional information about areas of their strengths and weaknesses.  If a student fails, he or she will have to wait 30 days to take the exam again.


A critical change initiated with the SIE exam is that students do not need to be sponsored to register for this exam.  The purpose of the change is to make it easier for individuals to enter the securities industry; however, they will still need to be sponsored for specialized exams, also referred to as “top off” exams.  Those taking the SIE exam must be 18 years of age, and the results are valid for four years.


With this rearrangement of material and changing of exams, FINRA will be retiring several exams.  The following exams will be retired:  Series 11, Series 62, Series 42, and Series 72.


University programs offering investment courses may want to help students prepare for the SIE exam because passing the exam will make students more desirable candidates for positions in the securities industry. We encourage schools to begin incorporating this exam preparation into courses starting in the fall of 2018.  We will have student materials in the summer.

Securities Industry Essentials Exam (SIE EXAM) 2016

exams concept

You may have heard that FINRA is going to be changing several exams to reduce redundancy and streamline the Securities Industry Essentials Exam (SIE EXAM) 2016 process.  They are proposing to offer a core exam covering:

  • the structure and function of the securities industry
  • the regulatory agencies and their responsibilities
  • basic economics
  • product knowledge, including stocks, bonds, and mutual funds
  • practices that are regulated and prohibited
  • professional conduct

This exam will have 100 questions, and individuals need not be sponsored by a company to take it.  Candidates will not be required to complete a U-4 or to be fingerprinted for this test.   Because of the minimal requirements, companies may encourage their employees to take the exam to increase their level of professionalism.   In addition, individuals who are still in school may take the exam, and persons thinking of making a job change or unemployed may take the exam to assist their job search.  If these candidates pass the exam, they will have four years in which to find employment with a sponsor before the passing grade expires.  If candidates fail the exam, they must wait 30 days to re-test.  A second failure requires a 30 day wait, and a third failure requires a 180 day wait.

Once the individual is hired by a sponsor company, he or she will be required to complete a “top off” exam containing specific material for Series 6, 7, or several of the more specialized FINRA exams.  Using Series 7 as an example, the specialized exam is likely to consist of 150 questions.  With the core exam of 100 questions, the total of 250 questions will be exactly the same number as contained in the Series 7 exam today.

At the November National Society of Compliance Professionals Annual Conference, it was suggested that the core exam would be released in late 2016, and the “top off” exams would be added in early 2017.  No outlines have been released for any of the exams, so we will be watching developments very carefully during the year to bring you the latest information.

NASAA has just announced that they will implement changes to the Series 63, 65, 66,  exams as of July 1, 2016.  Please see our articles on these separate exams so you are prepared!

What Does It Take to Balance a Job and Studying for a FINRA Exam?

Keir RIA

Although high school and college may have seemed quite challenging as you were going through them, when you look back on them later in life, you realize how much time you actually had available. Even if you had a job during one or both of those periods, chances are you had more than enough time to take care of studying and then have plenty of fun. Continue reading