CPFA - Questions With Proven Solutions (100%)
ERISA Exclusive Purpose Correct Answer - A fiduciary shall act
solely in the interest of participants and beneficiaries. Loyalty,
prudence, diversification, follow plan's governing documents.
ERISA Prudence Rule Correct Answer - Obligates a fiduciary
who lacks experience or expertise to seek assistance of an expert.
Must have a process for selecting such an expert that considers
qualifications and merits. Duty to monitor the expert.
Identify named fiduciaries Correct Answer - Plan Sponsor,
Plan Trustee, Plan Administrator
What actions might establish a fiduciary relationship? Correct
Answer - Discretion or control
Explain the R&R of the Plan Sponsor Correct Answer -
Oversees all other fiduciaries
Explain the R&R of Plan trustees Correct Answer - Responsible
for everything to do with plan assets. Safekeeping of plan assets,
prudent investment management, pursuing monies owed, following
participant directions, prudently selecting and monitoring service
providers, ensuring expenses paid are reasonable
Explain R&R of Plan Administrator Correct Answer - Oversee
plan operations, provide info and documents to participants,
summary plan descriptions and summary annual reports, 5500s,
various notices & fee disclosures, participant benefit statements.
DOL Fiduciary Standard Correct Answer - The DOL has
provided correction methods for specific prohibited transactions.
, The DOL and IRS work together to coordinate enforcement on
prohibited transaction issues. A DOL investigation letter will usually
ask for no more than five items related to the plan's operation.
Best interest contract exemption Correct Answer - The best-
interest contract exemption (BICE) is a rule passed by the
Department of Labor which allows fiduciaries to receive payments
in ways that were previously prohibited. BICE permitted or
exempted transactions that were not permitted earlier. With this
rule, revenue sharing and commissions are allowed as forms of
payment to fiduciaries.
3(16) Fiduciary Correct Answer - Plan Administrator - Ensures
the plan is run in accordance with ERISA. Retaining required
records, enforcing participation/eligibility and vesting
requirements, prudent selection and oversight of service providers,
reasonable expenses.
3(21) Fiduciary Correct Answer - Investment Advisor -
Advises on IPS/fund menus, recommends changes in accordance
with IPS, no administrative responsibilities
3(28) Fiduciary Correct Answer - Investment Manager -
Named fiduciary, draft IPS, responsibility for determining and
monitoring fund menu, authority to make investment changes
Identify Ministerial Functions performed by non-fiduciary service
providers Correct Answer - Assuring compliance with plan
documents/required testing, filing required forms, providing
participant disclosures, ensuring participant monies going into and
coming out of plan are protected, not exercising authority or control
over the plan.
ERISA Exclusive Purpose Correct Answer - A fiduciary shall act
solely in the interest of participants and beneficiaries. Loyalty,
prudence, diversification, follow plan's governing documents.
ERISA Prudence Rule Correct Answer - Obligates a fiduciary
who lacks experience or expertise to seek assistance of an expert.
Must have a process for selecting such an expert that considers
qualifications and merits. Duty to monitor the expert.
Identify named fiduciaries Correct Answer - Plan Sponsor,
Plan Trustee, Plan Administrator
What actions might establish a fiduciary relationship? Correct
Answer - Discretion or control
Explain the R&R of the Plan Sponsor Correct Answer -
Oversees all other fiduciaries
Explain the R&R of Plan trustees Correct Answer - Responsible
for everything to do with plan assets. Safekeeping of plan assets,
prudent investment management, pursuing monies owed, following
participant directions, prudently selecting and monitoring service
providers, ensuring expenses paid are reasonable
Explain R&R of Plan Administrator Correct Answer - Oversee
plan operations, provide info and documents to participants,
summary plan descriptions and summary annual reports, 5500s,
various notices & fee disclosures, participant benefit statements.
DOL Fiduciary Standard Correct Answer - The DOL has
provided correction methods for specific prohibited transactions.
, The DOL and IRS work together to coordinate enforcement on
prohibited transaction issues. A DOL investigation letter will usually
ask for no more than five items related to the plan's operation.
Best interest contract exemption Correct Answer - The best-
interest contract exemption (BICE) is a rule passed by the
Department of Labor which allows fiduciaries to receive payments
in ways that were previously prohibited. BICE permitted or
exempted transactions that were not permitted earlier. With this
rule, revenue sharing and commissions are allowed as forms of
payment to fiduciaries.
3(16) Fiduciary Correct Answer - Plan Administrator - Ensures
the plan is run in accordance with ERISA. Retaining required
records, enforcing participation/eligibility and vesting
requirements, prudent selection and oversight of service providers,
reasonable expenses.
3(21) Fiduciary Correct Answer - Investment Advisor -
Advises on IPS/fund menus, recommends changes in accordance
with IPS, no administrative responsibilities
3(28) Fiduciary Correct Answer - Investment Manager -
Named fiduciary, draft IPS, responsibility for determining and
monitoring fund menu, authority to make investment changes
Identify Ministerial Functions performed by non-fiduciary service
providers Correct Answer - Assuring compliance with plan
documents/required testing, filing required forms, providing
participant disclosures, ensuring participant monies going into and
coming out of plan are protected, not exercising authority or control
over the plan.
