2018 Tax Law Changes - Impact On The Securities Licensing Exams
The impact of the 2018 tax law changes on the items tested on the securities licensing exams is minimal. The biggest changes are major reductions to corporate tax rates and pass-through businesses, both of which are not tested on the exams.
Note that with major changes like this, the usual procedure is to "turn off" the affected questions and rewrite them, reintroducing them into the exam at a later date. For the first few months of 2018, this should be the case. Here are the changes that will affect the exams:
- The estate tax exclusion is doubled from $5.6 million to $11.2 million. The unlimited marital deduction stays the same. Note that the actual exclusion amount is not a tested item, since it is adjusted for inflation annually, but the unlimited marital exclusion must be known.
- Distributions of up to $10,000 per year without tax due can now be taken from 529 Plans to pay for schooling below the college level. Prior to the change this year, this was not permitted. As before, distributions can be taken to pay for college and graduate school education without limit or tax due. Also note that the "super funding" of 529 Plans by contributing 5X the gift limit amount of $15,000 is still allowed - it has not been changed.
- The Alternative Minimum Tax (AMT) is retained, but the exemption amounts have been increased and the list of AMT items that are to be included has been revised. The biggest change is that property and state income tax deductions are no longer deductible from federal tax, except for the 1st $10,000 of property taxes paid. This often threw people in high tax states who had big "SALT" (State And Local Tax) deductions into the AMT, because these are NOT deductible when computing the AMT. SALT deductions are still excluded from the AMT, so this has not changed, but far fewer people will fall into the AMT because they cannot take the SALT deduction on their regular tax return.
- The maximum income tax rate has been reduced to 37% from 39.6%. The actual rate is not tested, however it must be known that cash dividends and long-term capital gains are taxed at a preferential rate of 15% (or 20% for those in the highest federal tax bracket) and that these rates are lower than those imposed on short-term capital gains, which are taxed at ordinary income tax rates.
Note that there have been no changes to the tax treatment of retirement plan types, (which is a major tested item); nor are there changes to the tax rules for taxable and tax-free (municipal) bonds. The tax rules for stocks remain unchanged, including the ability to choose either FIFO or Specific Identification when selling shares of stock for capital gain or loss calculations (the ability to use Specific Identification was proposed to be eliminated, but it was retained in the revised tax law).
We will issue a printed supplement to anyone who has purchased our materials in the past 6 months. The changes will be reflected in our on-line programs over the next 90 days. Finally, the actual impact on these changes on the exams is minor and should not be a concern when studying for the exams.
Our Popular Mobile App is Now Available on Android
Android users can now prepare for the Series 6 and 7 Exams with Pass Perfect’s DATABANK To Go, the newly launched Android app. With DATABANK To Go you can study anytime and anywhere. Designed to accompany the DATABANK Practice Exams or the Smart Interactive Web Training, DATABANK To Go will help you get the edge you need to pass your exam the first time.
With a question pool of over 8,000 questions, DATABANK To Go covers all 10 major topics found in the actual exam. All of the tests are weighted in the same manner as the material in the actual exam.
- Unlimited quizzes for each of the 10 major topics covered on the Series 7 Exam
- 15 finals covering material from all 10 major topics
- 1300+ hyperlinked glossary terms
- Audio explanations via our ‘Listen’ feature
- SMART flashcards for those quick study sessions
- Available on Android and iOS devices
All of this is included with your purchase of the Databank Practice Exams or SMART Interactive Web Training.
Soon available for other Series from Pass Perfect.
FINRA Examination Changes and SIE Implementation Take Effect October 1st, 2018
FINRA has announced that its exam restructuring will take effect on 10/1/18 - basically 1 year from now. At that point, registered representative exams will have 2 components that must be passed:
SIE - Securities Industry Essentials - a 75 question test on basic content for all registered representative exams
Top-Off Exam - an exam covering the specific additional content for that license - for example, the Series 7 Top-Off exam is 125 questions.
The SIE can be taken by anyone without being sponsored by a member firm. However, to take the Top-Off exam still requires member firm sponsorship.
FINRA has published the following table for the restructuring:
FINRA Representative-Level Registration Categories and Qualification Examinations
|Registration Category (and CRD System Designation)
||Current Examination(s) (prior to October 1, 2018)
||Future Examination(s) (on or after October 1, 2018)
|Investment Company and Variable Contracts Products Representative (IR)
||Series 6 (100 questions)
||SIE (75 questions) + Revised Series 6 (50 questions)
|General Securities Representative (GS)
||Series 7 (250 questions)
||SIE (75 questions) + Revised Series 7 (125 questions)
|Direct Participation Programs Representative (DR)
||Series 22 (100 questions)
||SIE (75 questions) + Revised Series 22 (50 questions)
|Securities Trader (TD)
||Series 57 (125 questions)
||SIE (75 questions) + Revised Series 57 (50 questions)
|Investment Banking Representative (IB)
||Series 79 (175 questions)
||SIE (75 questions) + Revised Series 79 (75 questions)
|Private Securities Offerings Representative (PR)
||Series 82 (100 questions)
||SIE (75 questions) + Revised Series 82 (50 questions)
|Research Analyst (RS)
||Series 7 (250 questions) + Series 86 (Part I: Analysis) (100 questions) + Series 87 (Part II: Regulatory Administration and Best Practices) (50 questions)
||SIE (75 questions) + Revised Series 86 (Part I: Analysis) (100 questions) + Revised Series 87 (Part II: Regulatory Administration and Best Practices) (50 questions)
|Operations Professional (OS)
||Series 99 (100 questions)
||SIE (75 questions) + Revised Series 99 (50 questions)
For now, there are no changes to the current exams, and there are no changes to the principals exams. For more information see FINRA Regulatory Notice 17-30