Series 54 cheat sheet

The MSRB is a self-regulatory organization created by Exchange Act Section 15B; it writes rules for municipal securities dealers and municipal advisors, the SEC approves those rules, and enforcement is carried out by the SEC, FINRA and the bank regulators (OCC/Fed/FDIC).

The Series 54 qualifies an individual as a Municipal Fund Securities Limited Principal, permitting principal-level supervision of 529, ABLE and LGIP activity only; full municipal securities principal authority requires the Series 53, and sales activity requires the Series 51 or 52.

Rule G-27 requires written supervisory procedures, designation of supervisory personnel, review of transactions and customer confirmations, and at least an annual compliance review of the supervisory control system.

Rule G-3 governs qualification and continuing education: the regulatory element must be completed annually by December 31, and the firm element is developed and delivered by the dealer each year.

Rule G-17 imposes a duty of fair dealing independent of any specific rule: no deceptive, dishonest or unfair practice, no material misstatement or omission, and a duty of inquiry before recommending or selling.

Rule G-19 requires both a reasonable basis for a recommendation and a customer-specific suitability determination based on known facts about the customer's objectives, financial situation, tax status and risk tolerance.

Rule G-37 (pay-to-play) bars a dealer from municipal securities business for two years following certain political contributions to issuer officials and requires quarterly Form G-37/G-37x filings with the MSRB.

Rule G-20 limits gifts connected to municipal securities business to $100 per year per recipient and prohibits any quid pro quo; ordinary business meals and occasional entertainment are treated separately from gifts.

Rule G-21 and Rule G-19 obligations attach to the firm, but supervisory responsibility for municipal fund securities activity may be assigned only to a principal qualified under Series 53 or Series 54.

529 plans are qualified tuition programs under IRC Section 529 and come in two forms: prepaid tuition plans, which lock in future tuition value, and college savings plans, which are individual investment accounts.

There is no federal deduction for 529 contributions; earnings grow tax-deferred, qualified withdrawals are free of federal income tax, and nonqualified withdrawals tax earnings as ordinary income plus a 10% additional federal tax.

Advisor-sold 529 interests carry sales charges and ongoing distribution fees set by the program disclosure document; direct-sold interests generally carry no sales charge and pay no advisor compensation.

Qualified 529 expenses include K-12 tuition up to $10,000 per beneficiary per year, apprenticeship program costs, and up to $10,000 lifetime of student loan repayment per beneficiary.

SECURE 2.0 permits a lifetime rollover of up to $35,000 from a 529 to the beneficiary's Roth IRA, available only if the 529 has been maintained 15 years and subject to annual Roth contribution limits.

ABLE accounts are IRC Section 529A programs for individuals whose disability began before age 26 (before age 46 for tax years beginning after 2025) and pay for qualified disability expenses.

ABLE contributions from all sources are capped at the annual gift tax exclusion ($19,000 in 2025); when the account balance exceeds $100,000, SSI payments are suspended but Medicaid eligibility continues.

A 529-to-ABLE rollover is permitted up to the ABLE annual contribution limit, and 529 contributions qualify as completed gifts; a donor may elect to average a contribution over five years at five times the annual exclusion.

Local government investment pools are pooled vehicles sponsored by state or local governments for public funds and are municipal fund securities; they typically seek a stable $1.00 NAV under Rule 2a-7-style limits and are not FDIC insured.

Rule G-21 defines an advertisement broadly to include printed materials, websites, social media posts, seminar materials and any electronic communication directed at the public about municipal fund securities.

Advertisements and sales literature must be approved in writing by a designated municipal securities principal before first use, and the approval plus a copy of the material must be retained under MSRB recordkeeping rules.

Advertising may not project or forecast investment performance; any performance shown must be current, identified as past performance, and accompanied by a statement that past performance does not guarantee future results.

Performance figures must reflect sales charges and fund-level expenses or clearly disclose which charges are excluded, so that a return series is not presented on a basis more favorable than an investor would actually experience.

Any state tax benefit described in marketing must disclose residency requirements, the possibility of recapture or add-back on rollover or nonqualified withdrawal, and that benefits vary by state.

Rule G-17 requires marketing to disclose material conflicts and how the firm and representative are compensated, including sales charges, ongoing distribution fees and revenue sharing arrangements.

Suitability factors specific to 529 recommendations include the customer's state of residence and state tax benefit, investment time horizon, beneficiary's age, risk tolerance and other education savings.

Advertisements may not state or imply that the MSRB, the SEC, a state or any insurer guarantees or approves the plan, and may not suggest that municipal fund securities are FDIC insured or free of investment risk.

Rule G-8 requires dealers to make and keep records of orders, confirmations, customer accounts, correspondence, advertising and sales literature, customer complaints and supervisory reviews.

Rule G-9 requires preservation of most records for at least three years with the first two years in an easily accessible place; certain records, such as partnership articles and board minutes, are kept for the life of the firm.

Rule G-15 requires a confirmation at or before settlement disclosing the security, price, capacity, any sales charge, and the availability of the program or plan disclosure document.

Rule G-32 requires the underwriter to deliver the plan or program disclosure document to the customer by settlement, permits electronic delivery with consent, and requires submission of the document to EMMA.

Rule G-14 real-time transaction reporting does not apply to transactions in municipal fund securities, so 529, ABLE and LGIP trades are not reported to the MSRB's RTRS system.

Rule G-34 requires that a CUSIP number be obtained for a new issue before the securities are sold, including new municipal fund securities programs and share classes.

Rule G-37 reports are filed quarterly with the MSRB, due by the last day of the month following the end of each calendar quarter (April 30, July 31, October 31 and January 31).

Rule G-26 governs the transfer of customer accounts between dealers, and Rule G-28 addresses transactions between a dealer and its employees or associated persons.

EMMA is the MSRB's free public access system where disclosure documents, continuing disclosures and primary market information for municipal fund securities, including 529 plans, are posted.