CPFA Study 2 -Questions With Efficient Solutions
June is a Plan Sponsor of a small plan and decided she'll be acting as
the sole fiduciary of the plan. All of the following are her
responsibilities except? Correct Answer - Give investment
advice to participants
Under ERISA, the Plan Admin has the following roles, except?
Correct Answer - Redesigning the plan's employer matching
contribution formula
Under ERISA, all of the following are Plan Trustee responsibilities,
except? Correct Answer - Oversee the plan administrator
All of the following may be named fiduciaries in a plan document,
except? Correct Answer - Legal counsel who prepares the plan
document
Plans and objectives: Correct Answer - 1. What are the primary
concerns (tax benefits to the business and the owners, attracting
and retaining employee rank and file participant retirement
outcome?) 2. Which group(s) of employees is the plan sponsor
looking to benefit (rank and file employees, mid-management,
higher management, owners?) 3. Is there one or more groups of
employees who may not need the plan or unlikely to participate in
the plan? Business structure and
Business structure and type: Correct Answer - 1. What type of
business entity is the plan sponsor? 2. What does the census data
look like for the employer?
Related company ownership: Correct Answer - 1. Who are the
owners of the business and what percent do they own? (family
members, what relationship?) 2. Do the owners of the current
, business or the current business own any other businesses? 3. Do
the family members of the owners of the current business own any
other businesses?
Business cash flow and budget: Correct Answer - 1. What is the
contribution budget available? 2. Does the business have stable cash
flow?
Advisors can add value by pointing out the advantages and
disadvantages of different eligibility requirements. Examples:
Correct Answer - 1. Do your current plan eligibility provisions
work well with your plan goals? 2. Do you know why they were
selected? 3. Can your HR staff and/or payroll system effectively
handle employees who are immediately eligible for the plan? 4.
Would staff be able to process immediate entry into the plan along
with automatic enrollment? 5. Are you comfortable making
matching contributions every payroll period? 6. Do you have a lot of
turnover? 7. Would a one-year wait help manage the impact of that
turnover? 8. Would a requirement to work on the last day of the
plan year help manage the cost of turnover? 9. Are there employee
groups that you would like to exclude from the plan if it is possible
to do?
Contributions can have a major impact in Correct Answer -
supporting plan goals as well as plan costs.
Advisors should be familiar with different contribution provisions
and consider the following when designing contribution provisions:
Correct Answer - 1. Is there a philosophy on making employer
contributions? 2. Is the objective to maximize contributions to the
principal employees? 3. What is the objective and budget for non-
principal employees? 4. Is there one or more group of employees
who may not need the plan or who are unlikely to participate in the
plan? 5. How important is it that your employees be on track for an
June is a Plan Sponsor of a small plan and decided she'll be acting as
the sole fiduciary of the plan. All of the following are her
responsibilities except? Correct Answer - Give investment
advice to participants
Under ERISA, the Plan Admin has the following roles, except?
Correct Answer - Redesigning the plan's employer matching
contribution formula
Under ERISA, all of the following are Plan Trustee responsibilities,
except? Correct Answer - Oversee the plan administrator
All of the following may be named fiduciaries in a plan document,
except? Correct Answer - Legal counsel who prepares the plan
document
Plans and objectives: Correct Answer - 1. What are the primary
concerns (tax benefits to the business and the owners, attracting
and retaining employee rank and file participant retirement
outcome?) 2. Which group(s) of employees is the plan sponsor
looking to benefit (rank and file employees, mid-management,
higher management, owners?) 3. Is there one or more groups of
employees who may not need the plan or unlikely to participate in
the plan? Business structure and
Business structure and type: Correct Answer - 1. What type of
business entity is the plan sponsor? 2. What does the census data
look like for the employer?
Related company ownership: Correct Answer - 1. Who are the
owners of the business and what percent do they own? (family
members, what relationship?) 2. Do the owners of the current
, business or the current business own any other businesses? 3. Do
the family members of the owners of the current business own any
other businesses?
Business cash flow and budget: Correct Answer - 1. What is the
contribution budget available? 2. Does the business have stable cash
flow?
Advisors can add value by pointing out the advantages and
disadvantages of different eligibility requirements. Examples:
Correct Answer - 1. Do your current plan eligibility provisions
work well with your plan goals? 2. Do you know why they were
selected? 3. Can your HR staff and/or payroll system effectively
handle employees who are immediately eligible for the plan? 4.
Would staff be able to process immediate entry into the plan along
with automatic enrollment? 5. Are you comfortable making
matching contributions every payroll period? 6. Do you have a lot of
turnover? 7. Would a one-year wait help manage the impact of that
turnover? 8. Would a requirement to work on the last day of the
plan year help manage the cost of turnover? 9. Are there employee
groups that you would like to exclude from the plan if it is possible
to do?
Contributions can have a major impact in Correct Answer -
supporting plan goals as well as plan costs.
Advisors should be familiar with different contribution provisions
and consider the following when designing contribution provisions:
Correct Answer - 1. Is there a philosophy on making employer
contributions? 2. Is the objective to maximize contributions to the
principal employees? 3. What is the objective and budget for non-
principal employees? 4. Is there one or more group of employees
who may not need the plan or who are unlikely to participate in the
plan? 5. How important is it that your employees be on track for an
