Series 51 Practice Questions - Municipal Fund Securities Limited Principal Qualification Examination Exam

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Under Section 529 of the Internal Revenue Code, what is the primary tax advantage of investing in a qualified tuition program?

Contributions are tax-deductible on federal income tax returns Earnings grow tax-deferred and withdrawals are tax-free when used for qualified education expenses All contributions are exempt from federal gift tax Account balances are excluded from estate tax calculations entirely

Correct Answer:

Earnings grow tax-deferred and withdrawals are tax-free when used for qualified education expenses

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