CPFA LICENSE CERTIFIED PLAN FIDUCIARY
ACTUAL EXAM 2026/2027 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST |BRAND NEW
VERSION|JUST RELEASED!!
The JKL Company recently established a 401(k) Plan and hired Larry as its plan advisor. The Plan
Committee, with Larry's assistance, has just finalized the investment policy statement. he next
step is to start the investment selection process. Larry is planning to discuss all the following
issues regarding investment selection, EXCEPT:
a. The investment line-up should be diversified.
b. Self-directed brokerage accounts may be offered only to investment savvy participants.
c. Investment fees must be reasonable.
d. The investments selected should represent asset classes across a risk/reward spectrum.
b. Self-directed brokerage accounts may be offered only to investment savvy participants.
A new client with a 401(k) plan wants to add funds to enhance the diversification of the Plan.
Which of the following tasks should be completed first when considering adding funds to the
plan?
a. Prepare the new 404(a)(5) disclosures.
1|Page
,b. Establish dates for employee meetings to explain the investment changes.
c. Review the investment policy statement and confirm the asset classes permitted in the plan.
d. Order new enrollment kits.
c. Review the investment policy statement and confirm the asset classes permitted in the plan.
Which of the following parties typically maintains the investment policy statement?
a. Plan advisor
b. CFO
c. Plan accountant
d. HR manager
a. Plan advisor
All the following statements regarding the timing of investment meetings are
TRUE, EXCEPT:
a. An investment policy statement must specifically state how often the investments are
reviewed.
b. A plan advisor may assist in the scheduling of investment meetings.
c. An investment policy statement should be reviewed at least annually.
d. Smaller, owner-driven plans typically perform an annual investment review.
2|Page
,a. An investment policy statement must specifically state how often the investments are
reviewed.
The BIG fund has produced investment results consistently above its benchmarks. Recently,
tobacco company stocks were added to its portfolio. Upon hearing the news, several members
of the Retirement Plan committee declared their opposition to the tobacco industry and stated
they wanted the fund removed from the investment line-up. The investment policy statement
(IPS) does not include any selection criteria regarding ESG investing. The Committee may take all
the following actions, EXCEPT:
a. If the Committee decides to remove the fund, the IPS must be updated to permit this
removal.
b. The Committee must consider the participants' needs.
c. No action can be taken due to the fund's superior performance.
d. The issue should be documented.
c. No action can be taken due to the fund's superior performance.
Which statement describes a benefit of using target date funds as a qualified default investment
alternative?
a. They offer a professionally managed investment.
b. They provide a guaranteed rate of interest.
c. They require minimal fiduciary oversight.
d. They guarantee against loss of principal.
3|Page
, a. They offer a professionally managed investment.
Which statement regarding investment options is TRUE?
a. Asset allocation funds are designed to be the sole investment holding for a participant.
b. Collective investment funds are managed by insurance companies.
c. Balanced funds are designed to shift to more conservative investments as the participant
ages.
d. Stable value funds are a good choice for a qualified default investment alternative
a. Asset allocation funds are designed to be the sole investment holding for a participant.
All of the following statements generally describe passively managed investment funds, EXCEPT:
a. Funds that use a passive strategy manage to a market benchmark.
b. Passive investment managers believe in market efficiency.
c. Passive funds generally offer significantly more revenue sharing than other investment
options.
d. Passive funds generally have lower investment costs than actively managed funds.
c. Passive funds generally offer significantly more revenue sharing than other investment
options.
Louis is a plan advisor who is preparing for his initial meeting with the Investment Committee of
a new client. While reviewing previous meeting minutes, he notices that the Committee wants
to expand its core fund line-up. In the upcoming meeting, Louis may discuss all the following
issues regarding a prudent investment selection process, EXCEPT:
4|Page
ACTUAL EXAM 2026/2027 WITH ACTUAL
CORRECT QUESTIONS AND VERIFIED
DETAILED ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST |BRAND NEW
VERSION|JUST RELEASED!!
The JKL Company recently established a 401(k) Plan and hired Larry as its plan advisor. The Plan
Committee, with Larry's assistance, has just finalized the investment policy statement. he next
step is to start the investment selection process. Larry is planning to discuss all the following
issues regarding investment selection, EXCEPT:
a. The investment line-up should be diversified.
b. Self-directed brokerage accounts may be offered only to investment savvy participants.
c. Investment fees must be reasonable.
d. The investments selected should represent asset classes across a risk/reward spectrum.
b. Self-directed brokerage accounts may be offered only to investment savvy participants.
A new client with a 401(k) plan wants to add funds to enhance the diversification of the Plan.
Which of the following tasks should be completed first when considering adding funds to the
plan?
a. Prepare the new 404(a)(5) disclosures.
1|Page
,b. Establish dates for employee meetings to explain the investment changes.
c. Review the investment policy statement and confirm the asset classes permitted in the plan.
d. Order new enrollment kits.
c. Review the investment policy statement and confirm the asset classes permitted in the plan.
Which of the following parties typically maintains the investment policy statement?
a. Plan advisor
b. CFO
c. Plan accountant
d. HR manager
a. Plan advisor
All the following statements regarding the timing of investment meetings are
TRUE, EXCEPT:
a. An investment policy statement must specifically state how often the investments are
reviewed.
b. A plan advisor may assist in the scheduling of investment meetings.
c. An investment policy statement should be reviewed at least annually.
d. Smaller, owner-driven plans typically perform an annual investment review.
2|Page
,a. An investment policy statement must specifically state how often the investments are
reviewed.
The BIG fund has produced investment results consistently above its benchmarks. Recently,
tobacco company stocks were added to its portfolio. Upon hearing the news, several members
of the Retirement Plan committee declared their opposition to the tobacco industry and stated
they wanted the fund removed from the investment line-up. The investment policy statement
(IPS) does not include any selection criteria regarding ESG investing. The Committee may take all
the following actions, EXCEPT:
a. If the Committee decides to remove the fund, the IPS must be updated to permit this
removal.
b. The Committee must consider the participants' needs.
c. No action can be taken due to the fund's superior performance.
d. The issue should be documented.
c. No action can be taken due to the fund's superior performance.
Which statement describes a benefit of using target date funds as a qualified default investment
alternative?
a. They offer a professionally managed investment.
b. They provide a guaranteed rate of interest.
c. They require minimal fiduciary oversight.
d. They guarantee against loss of principal.
3|Page
, a. They offer a professionally managed investment.
Which statement regarding investment options is TRUE?
a. Asset allocation funds are designed to be the sole investment holding for a participant.
b. Collective investment funds are managed by insurance companies.
c. Balanced funds are designed to shift to more conservative investments as the participant
ages.
d. Stable value funds are a good choice for a qualified default investment alternative
a. Asset allocation funds are designed to be the sole investment holding for a participant.
All of the following statements generally describe passively managed investment funds, EXCEPT:
a. Funds that use a passive strategy manage to a market benchmark.
b. Passive investment managers believe in market efficiency.
c. Passive funds generally offer significantly more revenue sharing than other investment
options.
d. Passive funds generally have lower investment costs than actively managed funds.
c. Passive funds generally offer significantly more revenue sharing than other investment
options.
Louis is a plan advisor who is preparing for his initial meeting with the Investment Committee of
a new client. While reviewing previous meeting minutes, he notices that the Committee wants
to expand its core fund line-up. In the upcoming meeting, Louis may discuss all the following
issues regarding a prudent investment selection process, EXCEPT:
4|Page
