CPFA EXAM QUESTIONS AND ANSWERS
100% CORRECT!!
,A) A TPA performs annual compliance testing. - ANSWER Which statement regarding
service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan
provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices.
A) Provides efficient contribution and distribution processes. - ANSWER Which
statement regarding bundled service arrangements is TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service arrangement.
C) Permits for specific single provider within the arrangement to be easily removed and
replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company.
A) Combining auto-enrollment with targeted education. - ANSWER Based on behavioral
finance research, which of the following is a best practice for producing successful
participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision making.
C) DEF has the right to "opt out" and be excluded from the related group. - ANSWER
Company ABC and Company DEF are determined to be part of a related group of
companies. All the following are TRUE except:
A) The employees of both ABC and DEF may end up participating in one plan.
B) ABC may be required to make contributions for its employees into DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan.
A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred. - ANSWER Which of the following plan designs may result in better participant
deferral behavior?
, A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred.
B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer matching
contribution.
D) Adding a profit-sharing contribution.
B) Has at least two partners. - ANSWER A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120.
A) A plan advisor should inform the employer that required contributions will be waived
for any year that the company does not make a profit. - ANSWER All of the following
describe the impact of a business's cash flow and budget when establishing a plan,
EXCEPT:
A) A plan advisor should inform the employer that required contributions will be waived
for any year that the company does not make a profit.
B) A plan advisor should explain a plan's contribution commitment to the employer.
C) Employers should have a stable cash flow if they are considering adopting a Defined
Benefit/Defined Contribution combination plan.
D) A plan advisor may work with the service provider to show estimates of what
employer contributions would be under different contribution formulas.
B) Average deferral rate of participants in the plan. - ANSWER Which of the following
reports can be used in measuring plan effectiveness and participant outcomes?
A) Number of terminated participants who elected to roll their accounts into IRAs.
B) Average deferral rate of participants in the plan.
C) Independent accountant's required annual audit of the plan.
D) Summary Annual Report.
B) Participants receive a guarantee of lifetime income payments. - ANSWER All of the
following are benefits of participant retirement readiness, EXCEPT:
A) Employers can better manage their workforce needs.
B) Participants receive a guarantee of lifetime income payments.
100% CORRECT!!
,A) A TPA performs annual compliance testing. - ANSWER Which statement regarding
service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan
provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices.
A) Provides efficient contribution and distribution processes. - ANSWER Which
statement regarding bundled service arrangements is TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service arrangement.
C) Permits for specific single provider within the arrangement to be easily removed and
replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company.
A) Combining auto-enrollment with targeted education. - ANSWER Based on behavioral
finance research, which of the following is a best practice for producing successful
participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision making.
C) DEF has the right to "opt out" and be excluded from the related group. - ANSWER
Company ABC and Company DEF are determined to be part of a related group of
companies. All the following are TRUE except:
A) The employees of both ABC and DEF may end up participating in one plan.
B) ABC may be required to make contributions for its employees into DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan.
A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred. - ANSWER Which of the following plan designs may result in better participant
deferral behavior?
, A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred.
B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer matching
contribution.
D) Adding a profit-sharing contribution.
B) Has at least two partners. - ANSWER A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120.
A) A plan advisor should inform the employer that required contributions will be waived
for any year that the company does not make a profit. - ANSWER All of the following
describe the impact of a business's cash flow and budget when establishing a plan,
EXCEPT:
A) A plan advisor should inform the employer that required contributions will be waived
for any year that the company does not make a profit.
B) A plan advisor should explain a plan's contribution commitment to the employer.
C) Employers should have a stable cash flow if they are considering adopting a Defined
Benefit/Defined Contribution combination plan.
D) A plan advisor may work with the service provider to show estimates of what
employer contributions would be under different contribution formulas.
B) Average deferral rate of participants in the plan. - ANSWER Which of the following
reports can be used in measuring plan effectiveness and participant outcomes?
A) Number of terminated participants who elected to roll their accounts into IRAs.
B) Average deferral rate of participants in the plan.
C) Independent accountant's required annual audit of the plan.
D) Summary Annual Report.
B) Participants receive a guarantee of lifetime income payments. - ANSWER All of the
following are benefits of participant retirement readiness, EXCEPT:
A) Employers can better manage their workforce needs.
B) Participants receive a guarantee of lifetime income payments.
