NAPA CPFA® Certification Exam Practice Questions & Answers 2026/2027 Edition | 5 Exam Versions | 200 Questions with Rationales EXAM VERSION 1: Fiduciary Roles & Responsibilities Questions 1-40

NAPA CPFA® Certification Exam Practice
Questions & Answers
2026/2027 Edition | 5 Exam Versions | 200
Questions with Rationales


EXAM VERSION 1: Fiduciary Roles &
Responsibilities
Questions 1-40

Question 1
Under ERISA, an individual is considered a fiduciary if they:
A) Hold a title of "Plan Administrator" in the plan document
B) Are named as a fiduciary in the plan document
C) Exercise discretionary authority or control over plan management or assets
D) All of the above
Answer: D
Rationale: ERISA defines a fiduciary functionally based on what a person does,
not their title. Fiduciary status arises when a person exercises discretionary
authority or control over plan management or assets, provides investment advice
for compensation, or is named as a fiduciary in the plan document. Even an
employee performing administrative functions within a framework of policies is
not ordinarily a fiduciary .

,Question 2
Which of the following individuals would be considered a fiduciary under ERISA?
A) A recordkeeper who processes plan transactions according to the plan's
investment policy
B) An investment committee member who selects and monitors the plan's
investment lineup
C) An accountant who performs ministerial administrative functions
D) An attorney who provides legal advice to the plan sponsor
Answer: B
Rationale: An investment committee member who selects and monitors
investments exercises discretionary control over plan assets, making them a
fiduciary. Accountants, recordkeepers, attorneys, and consultants performing
ministerial functions within a policy framework are not ordinarily considered
fiduciaries .


Question 3
What is the "exclusive benefit rule" under ERISA?
A) Fiduciaries must act for the exclusive purpose of providing benefits to
participants and beneficiaries
B) Fiduciaries must only consider participants with the largest account balances
C) Fiduciaries may use plan assets for any purpose that benefits the plan sponsor
D) The rule only applies to defined benefit plans
Answer: A
Rationale: The exclusive benefit rule (duty of loyalty) requires fiduciaries to
discharge their duties solely in the interest of plan participants and beneficiaries.
They must act to provide benefits to participants and use plan assets only to pay for
benefits and reasonable administrative costs .

,Question 4
Under the "Prudence Rule," what must a fiduciary demonstrate when selecting a
plan investment?
A) The investment will outperform the market every year
B) They have followed a process to investigate the investment and its role in the
portfolio
C) The investment has no fees associated with it
D) A majority of plan participants voted for the investment
Answer: B
Rationale: The Prudence Rule is a process-oriented standard. It does not require
perfect outcomes. Instead, a fiduciary must act "with the care, skill, prudence, and
diligence" that a prudent person would use. This means conducting a thorough
investigation, comparing alternatives, and documenting the decision-making
process .


Question 5
The duty to diversify plan investments requires fiduciaries to:
A) Invest all plan assets in the safest available option
B) Diversify investments to minimize the risk of large losses
C) Invest in at least 10 different mutual funds
D) Avoid all alternative investments
Answer: B
Rationale: The duty to diversify requires fiduciaries to diversify plan investments
to minimize the risk of large losses, with limited exceptions. This does not require
a specific number of investments but rather a prudent approach to risk
management .


Question 6
Fiduciaries who breach their duties under ERISA:

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B) May be personally liable to restore losses to the plan
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C) Are protected from liability by the plan sponsor
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D) Only face liability if they acted intentionally
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Answer: B j0




Rationale: Fiduciaries who breach their duties may be personally liable to restore
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any losses to the plan or restore any profits made through improper use of plan
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assets. Courts may take whatever action is appropriate against fiduciaries who
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breach their duties .
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Question 7 j0




Which of the following best describes a "Named Fiduciary"?
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A) Anyone who gives investment advice to the plan j0 j0 j0 j0 j0 j0 j0




B) The individual or entity identified in the plan document with fiduciary authority
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and control
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C) The third-party administrator (TPA) who processes daily plan transactions
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D) All plan participants over a certain age
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Answer: B j0




Rationale: The plan document must name at least one fiduciary (the "Named
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Fiduciary") who has ultimate authority over the plan's management and control. This
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person or entity can delegate certain responsibilities to other fiduciaries .
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Question 8 j0




The CPFAcredential is issued by:
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A) The Department of Labor
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B) FINRA
C) The National Association of Plan Advisors (NAPA)
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D) The American Retirement Association (ARA)
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Answer: C j0