CERTIFIED PLAN FIDUCIARY ADVISOR (CPFA) CERTIFICATION
EXAM 2026/2027 TESTBANK COMPLETE ACCURATE EXAM ACTUAL
QUESTIONS WITH WELL ELABORATED ANSWERS WITH DEATILED
RATIONALES (RELIABLE ANSWERS) LATEST UPDATED VERSION
2026 EDITION |ALREADY GRADED A+ (BRAND NEW!) |JUST
RELEASED
1. Under ERISA, a person becomes a fiduciary to the extent they exercise what
over plan assets?
A) Ministerial or administrative control
B) Discretionary authority or control
C) Any authority, even if non-discretionary
D) Solely investment advisory functions
Correct Answer: B
Rationale: Under ERISA Section 3(21)(A), fiduciary status is determined by
function, not title. A person becomes a fiduciary to the extent they exercise
discretionary authority or control over the management of the plan or disposition
of plan assets. Administrative or ministerial functions without discretion do not
confer fiduciary status .
2. The "Exclusive Benefit Rule" requires fiduciaries to act solely in the interest of
which group?
A) The plan sponsor and its owners
B) Plan participants and beneficiaries
C) Service providers to the plan
D) The Department of Labor
,Correct Answer: B
Rationale: The exclusive benefit rule (ERISA Section 404(a)(1)(A)) requires
fiduciaries to discharge their duties solely in the interest of participants and
beneficiaries for the exclusive purpose of providing benefits and defraying
reasonable plan expenses. Fiduciaries cannot prioritize employer interests, their
own compensation, or other parties .
3. Which standard of conduct requires a fiduciary to act with the care, skill, and
diligence of a "prudent person acting in a like capacity"?
A) The Exclusive Benefit Rule
B) The Prudent Expert Rule
C) The Duty of Loyalty
D) The Fiduciary Safe Harbor
Correct Answer: B
Rationale: Under ERISA Section 404(a)(1)(B), fiduciaries must act with the care,
skill, prudence, and diligence that a prudent person acting in a like capacity and
familiar with such matters would use. This is known as the "prudent expert"
standard and requires fiduciaries to make informed, documented decisions .
4. What are the four basic fiduciary duties under ERISA Section 404?
A) Loyalty, prudence, diversification, and following plan documents
B) Loyalty, transparency, diversification, and following plan documents
C) Prudence, transparency, diversification, and following plan documents
D) Loyalty, prudence, transparency, and diversification
Correct Answer: A
,Rationale: The four basic fiduciary duties are: duty of loyalty (exclusive benefit),
duty of prudence (care, skill, and diligence), duty to diversify plan investments,
and duty to follow the plan document. No fiduciary can guarantee investment
returns; ERISA only requires a prudent process, not specific outcomes .
5. A plan fiduciary violates the "prohibited transaction rules" when they engage in
which of the following?
A) Purchasing an investment recommended by a 3(21) advisor
B) Leasing office space to the plan at fair market value
C) Allowing participants to take loans from the plan
D) Selling property to the plan for less than fair market value
Correct Answer: D
Rationale: Under ERISA Section 406, a fiduciary cannot cause a plan to engage in
certain transactions with a "party in interest" unless an exemption applies.
Common prohibited transactions include selling property, lending money, or
furnishing goods/services between the plan and a party in interest, especially when
not at fair market value .
6. Which of the following is considered a "party in interest" under ERISA?
A) Plan fiduciaries and service providers
B) The plan sponsor and its owners/officers
C) Plan participants and certain relatives of parties in interest
D) All of the above
Correct Answer: D
Rationale: The definition of "party in interest" (ERISA Section 3(14)) is broad and
includes plan fiduciaries and service providers, the plan sponsor and its
owners/officers, employees and participants, and certain relatives of these parties.
, This expansive definition helps prevent self-dealing and conflicts of interest that
could harm the plan .
7. A fiduciary who breaches their duties under ERISA may be subject to which
consequence?
A) Removal from fiduciary position only
B) Personal liability for losses to the plan and potential 20% penalty
C) Corporate indemnification for all losses
D) No consequences if the breach was unintentional
Correct Answer: B
Rationale: ERISA Section 409(a) makes fiduciaries personally liable to make good
any losses resulting from a breach of fiduciary duty. A fiduciary's liability may
also include a 20 percent penalty assessed by the Department of Labor, removal
from fiduciary position, and, in extreme cases, criminal penalties .
8. Which document outlines the procedures for selecting, monitoring, and
replacing plan investments?
A) Summary Plan Description (SPD)
B) Investment Policy Statement (IPS)
C) Form 5500
D) 408(b)(2) Disclosure
Correct Answer: B
Rationale: The Investment Policy Statement (IPS) is a written document that
establishes the framework for investment decisions, including asset allocation
targets, risk parameters, selection criteria, monitoring procedures, and benchmarks.
While not strictly required by law, an IPS is considered a fiduciary best practice
and evidence of a prudent process .
EXAM 2026/2027 TESTBANK COMPLETE ACCURATE EXAM ACTUAL
QUESTIONS WITH WELL ELABORATED ANSWERS WITH DEATILED
RATIONALES (RELIABLE ANSWERS) LATEST UPDATED VERSION
2026 EDITION |ALREADY GRADED A+ (BRAND NEW!) |JUST
RELEASED
1. Under ERISA, a person becomes a fiduciary to the extent they exercise what
over plan assets?
A) Ministerial or administrative control
B) Discretionary authority or control
C) Any authority, even if non-discretionary
D) Solely investment advisory functions
Correct Answer: B
Rationale: Under ERISA Section 3(21)(A), fiduciary status is determined by
function, not title. A person becomes a fiduciary to the extent they exercise
discretionary authority or control over the management of the plan or disposition
of plan assets. Administrative or ministerial functions without discretion do not
confer fiduciary status .
2. The "Exclusive Benefit Rule" requires fiduciaries to act solely in the interest of
which group?
A) The plan sponsor and its owners
B) Plan participants and beneficiaries
C) Service providers to the plan
D) The Department of Labor
,Correct Answer: B
Rationale: The exclusive benefit rule (ERISA Section 404(a)(1)(A)) requires
fiduciaries to discharge their duties solely in the interest of participants and
beneficiaries for the exclusive purpose of providing benefits and defraying
reasonable plan expenses. Fiduciaries cannot prioritize employer interests, their
own compensation, or other parties .
3. Which standard of conduct requires a fiduciary to act with the care, skill, and
diligence of a "prudent person acting in a like capacity"?
A) The Exclusive Benefit Rule
B) The Prudent Expert Rule
C) The Duty of Loyalty
D) The Fiduciary Safe Harbor
Correct Answer: B
Rationale: Under ERISA Section 404(a)(1)(B), fiduciaries must act with the care,
skill, prudence, and diligence that a prudent person acting in a like capacity and
familiar with such matters would use. This is known as the "prudent expert"
standard and requires fiduciaries to make informed, documented decisions .
4. What are the four basic fiduciary duties under ERISA Section 404?
A) Loyalty, prudence, diversification, and following plan documents
B) Loyalty, transparency, diversification, and following plan documents
C) Prudence, transparency, diversification, and following plan documents
D) Loyalty, prudence, transparency, and diversification
Correct Answer: A
,Rationale: The four basic fiduciary duties are: duty of loyalty (exclusive benefit),
duty of prudence (care, skill, and diligence), duty to diversify plan investments,
and duty to follow the plan document. No fiduciary can guarantee investment
returns; ERISA only requires a prudent process, not specific outcomes .
5. A plan fiduciary violates the "prohibited transaction rules" when they engage in
which of the following?
A) Purchasing an investment recommended by a 3(21) advisor
B) Leasing office space to the plan at fair market value
C) Allowing participants to take loans from the plan
D) Selling property to the plan for less than fair market value
Correct Answer: D
Rationale: Under ERISA Section 406, a fiduciary cannot cause a plan to engage in
certain transactions with a "party in interest" unless an exemption applies.
Common prohibited transactions include selling property, lending money, or
furnishing goods/services between the plan and a party in interest, especially when
not at fair market value .
6. Which of the following is considered a "party in interest" under ERISA?
A) Plan fiduciaries and service providers
B) The plan sponsor and its owners/officers
C) Plan participants and certain relatives of parties in interest
D) All of the above
Correct Answer: D
Rationale: The definition of "party in interest" (ERISA Section 3(14)) is broad and
includes plan fiduciaries and service providers, the plan sponsor and its
owners/officers, employees and participants, and certain relatives of these parties.
, This expansive definition helps prevent self-dealing and conflicts of interest that
could harm the plan .
7. A fiduciary who breaches their duties under ERISA may be subject to which
consequence?
A) Removal from fiduciary position only
B) Personal liability for losses to the plan and potential 20% penalty
C) Corporate indemnification for all losses
D) No consequences if the breach was unintentional
Correct Answer: B
Rationale: ERISA Section 409(a) makes fiduciaries personally liable to make good
any losses resulting from a breach of fiduciary duty. A fiduciary's liability may
also include a 20 percent penalty assessed by the Department of Labor, removal
from fiduciary position, and, in extreme cases, criminal penalties .
8. Which document outlines the procedures for selecting, monitoring, and
replacing plan investments?
A) Summary Plan Description (SPD)
B) Investment Policy Statement (IPS)
C) Form 5500
D) 408(b)(2) Disclosure
Correct Answer: B
Rationale: The Investment Policy Statement (IPS) is a written document that
establishes the framework for investment decisions, including asset allocation
targets, risk parameters, selection criteria, monitoring procedures, and benchmarks.
While not strictly required by law, an IPS is considered a fiduciary best practice
and evidence of a prudent process .
