CPFA PRACTICE EXAM (NAPA
QUESTIONS) QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF
Core Domains
ERISA Fiduciary Roles and Responsibilities
Fiduciary Oversight and Plan Governance
ERISA Plan Investment Management
Plan Management and Administration
Plan Fees and Service Provider Evaluation
Participant Outcomes and Retirement Readiness
Regulatory Compliance and Risk Management
Qualified Default Investment Alternatives (QDIAs)
Introduction
The CPFA Practice Examination assesses the retirement plan
advisor's competency in ERISA fiduciary governance, plan design,
and investment stewardship. The examination evaluates
knowledge of fiduciary standards, prohibited transactions, plan
administration, fee disclosure, and participant outcomes.
Questions incorporate multiple-choice and scenario-based
formats requiring application of ERISA, DOL regulations, and
SECURE 2.0 provisions to real-world plan scenarios. Emphasis is
placed on the functional fiduciary test, the four core fiduciary
duties, service provider oversight, and QDIA requirements. This
,assessment ensures practitioners demonstrate the critical thinking
skills necessary for prudent fiduciary decision-making and
compliance with federal retirement plan law.
SECTION ONE: QUESTIONS 1–75
Question 1
Under ERISA Section 3(21), a person is considered a fiduciary to
the extent they:
A. Only sign the Form 5500 as preparer
B. Exercise discretionary authority or control over plan
management or plan assets, render investment advice for a fee, or
have discretionary authority over plan administration
C. Process payroll without discretion
D. Provide investment education without advice
🟢 B. Exercise discretionary authority or control over plan
management or plan assets, render investment advice for a fee, or
have discretionary authority over plan administration
🔴 RATIONALE: ERISA §3(21)(A) establishes the functional
fiduciary test: fiduciary status is determined by the functions
performed, not the title. Exercising discretionary authority or
control over plan management, disposition of plan assets, or plan
administration creates fiduciary status. Ministerial functions such
as payroll processing and Form 5500 preparation do not confer
fiduciary status .
Question 2
The four exclusive fiduciary duties under ERISA §404(a) are loyalty,
prudence, diversification, and:
,A. Guaranteeing returns
B. Minimizing all fees to zero
C. Profit maximization
D. Following plan documents and acting in accordance with
documents consistent with ERISA
🟢 D. Following plan documents and acting in accordance with
documents consistent with ERISA
🔴 RATIONALE: ERISA §404(a)(1)(A)-(D) establishes four core
fiduciary duties: loyalty (exclusive purpose), prudence (prudent
expert standard), diversification of investments, and following the
plan documents to the extent consistent with ERISA. No fiduciary
guarantees returns or is required to minimize fees to zero .
Question 3
The Duty of Loyalty under ERISA requires fiduciaries to act:
A. Solely in the interest of participants and beneficiaries and for
the exclusive purpose of providing benefits and defraying
reasonable expenses
B. Solely for the plan sponsor's balance sheet
C. For any stakeholder's benefit
D. To maximize employer stock value
🟢 A. Solely in the interest of participants and beneficiaries and
for the exclusive purpose of providing benefits and defraying
reasonable expenses
🔴 RATIONALE: ERISA §404(a)(1)(A) establishes the Exclusive
Purpose Rule, requiring fiduciaries to discharge duties solely in
the interest of plan participants and beneficiaries. Fiduciaries
cannot prioritize the employer's interests, their own
compensation, or other parties .
, Question 4
The prudent person standard under ERISA §404(a)(1)(B) is
measured as:
A. Hindsight of best performer
B. Prudent layperson standard
C. No standard exists
D. Prudent expert — care, skill, prudence, and diligence of a
prudent person acting in like capacity and familiar with such
matters
🟢 D. Prudent expert — care, skill, prudence, and diligence of a
prudent person acting in like capacity and familiar with such
matters
🔴 RATIONALE: ERISA applies the prudent expert standard,
requiring fiduciaries to act with the care, skill, prudence, and
diligence that a prudent person acting in a like capacity and
familiar with such matters would use. The standard evaluates
process, not outcome — fiduciaries are not liable for investment
losses if a prudent process was followed .
Question 5
A 3(21) fiduciary advisor compared to a 3(38) investment
manager:
A. Both assume full discretionary authority identically
B. 3(21) provides recommendations; plan fiduciary retains
discretion to approve. 3(38) assumes full discretionary authority to
select/monitor investments, relieving appointing fiduciary of
investment decision liability if prudently selected/monitored
C. No difference exists between the two roles
D. 3(38) provides only education
QUESTIONS) QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A | INSTANT
DOWNLOAD PDF
Core Domains
ERISA Fiduciary Roles and Responsibilities
Fiduciary Oversight and Plan Governance
ERISA Plan Investment Management
Plan Management and Administration
Plan Fees and Service Provider Evaluation
Participant Outcomes and Retirement Readiness
Regulatory Compliance and Risk Management
Qualified Default Investment Alternatives (QDIAs)
Introduction
The CPFA Practice Examination assesses the retirement plan
advisor's competency in ERISA fiduciary governance, plan design,
and investment stewardship. The examination evaluates
knowledge of fiduciary standards, prohibited transactions, plan
administration, fee disclosure, and participant outcomes.
Questions incorporate multiple-choice and scenario-based
formats requiring application of ERISA, DOL regulations, and
SECURE 2.0 provisions to real-world plan scenarios. Emphasis is
placed on the functional fiduciary test, the four core fiduciary
duties, service provider oversight, and QDIA requirements. This
,assessment ensures practitioners demonstrate the critical thinking
skills necessary for prudent fiduciary decision-making and
compliance with federal retirement plan law.
SECTION ONE: QUESTIONS 1–75
Question 1
Under ERISA Section 3(21), a person is considered a fiduciary to
the extent they:
A. Only sign the Form 5500 as preparer
B. Exercise discretionary authority or control over plan
management or plan assets, render investment advice for a fee, or
have discretionary authority over plan administration
C. Process payroll without discretion
D. Provide investment education without advice
🟢 B. Exercise discretionary authority or control over plan
management or plan assets, render investment advice for a fee, or
have discretionary authority over plan administration
🔴 RATIONALE: ERISA §3(21)(A) establishes the functional
fiduciary test: fiduciary status is determined by the functions
performed, not the title. Exercising discretionary authority or
control over plan management, disposition of plan assets, or plan
administration creates fiduciary status. Ministerial functions such
as payroll processing and Form 5500 preparation do not confer
fiduciary status .
Question 2
The four exclusive fiduciary duties under ERISA §404(a) are loyalty,
prudence, diversification, and:
,A. Guaranteeing returns
B. Minimizing all fees to zero
C. Profit maximization
D. Following plan documents and acting in accordance with
documents consistent with ERISA
🟢 D. Following plan documents and acting in accordance with
documents consistent with ERISA
🔴 RATIONALE: ERISA §404(a)(1)(A)-(D) establishes four core
fiduciary duties: loyalty (exclusive purpose), prudence (prudent
expert standard), diversification of investments, and following the
plan documents to the extent consistent with ERISA. No fiduciary
guarantees returns or is required to minimize fees to zero .
Question 3
The Duty of Loyalty under ERISA requires fiduciaries to act:
A. Solely in the interest of participants and beneficiaries and for
the exclusive purpose of providing benefits and defraying
reasonable expenses
B. Solely for the plan sponsor's balance sheet
C. For any stakeholder's benefit
D. To maximize employer stock value
🟢 A. Solely in the interest of participants and beneficiaries and
for the exclusive purpose of providing benefits and defraying
reasonable expenses
🔴 RATIONALE: ERISA §404(a)(1)(A) establishes the Exclusive
Purpose Rule, requiring fiduciaries to discharge duties solely in
the interest of plan participants and beneficiaries. Fiduciaries
cannot prioritize the employer's interests, their own
compensation, or other parties .
, Question 4
The prudent person standard under ERISA §404(a)(1)(B) is
measured as:
A. Hindsight of best performer
B. Prudent layperson standard
C. No standard exists
D. Prudent expert — care, skill, prudence, and diligence of a
prudent person acting in like capacity and familiar with such
matters
🟢 D. Prudent expert — care, skill, prudence, and diligence of a
prudent person acting in like capacity and familiar with such
matters
🔴 RATIONALE: ERISA applies the prudent expert standard,
requiring fiduciaries to act with the care, skill, prudence, and
diligence that a prudent person acting in a like capacity and
familiar with such matters would use. The standard evaluates
process, not outcome — fiduciaries are not liable for investment
losses if a prudent process was followed .
Question 5
A 3(21) fiduciary advisor compared to a 3(38) investment
manager:
A. Both assume full discretionary authority identically
B. 3(21) provides recommendations; plan fiduciary retains
discretion to approve. 3(38) assumes full discretionary authority to
select/monitor investments, relieving appointing fiduciary of
investment decision liability if prudently selected/monitored
C. No difference exists between the two roles
D. 3(38) provides only education
