NAPA CPFA Certification Exam | 2026/2027
Edition | Real Exam Questions with 100%
Verified Correct Answers
National Association of Plan Advisors (NAPA) Certified Plan Fiduciary Advisor |
Expert-Verified Q&A | Certification-Ready Format
Introduction
This document provides a comprehensive evaluation instrument for the NAPA Certified Plan
Fiduciary Advisor (CPFA) examination aligned with the 2026/2027 curriculum framework. The
70 questions presented herein span the four principal competency domains defined by the
National Association of Plan Advisors: fiduciary roles and responsibilities under ERISA
regulations, fiduciary oversight and plan administration, plan investment management and
monitoring, and plan management with fee analysis and participant communications. Each
question is accompanied by a verified correct answer and a detailed rationale grounded in current
ERISA statutory provisions, Department of Labor regulatory guidance, and established industry
standards for prudent plan management. The instrument is designed to assess an advisor's
capacity to fulfill fiduciary obligations, conduct prudent investment oversight, ensure regulatory
compliance, and safeguard the interests of plan participants and beneficiaries. All answers have
been verified against the most current regulatory frameworks to ensure accuracy and alignment
with the standards required for CPFA certification.
Content Area Overview
Content Area Questions Key Topics Weight
Fiduciary Roles, 1 - 18 ERISA sections 402(a), 25%
Responsibilities & 404, 3(21), 3(38);
ERISA Regulations prudent person
standard; prohibited
transactions; fiduciary
breach consequences
Fiduciary Oversight & 19 - 35 Plan governance; 25%
Plan Administration committee structure;
document retention;
SPD requirements;
compliance
monitoring; service
provider oversight
Plan Investment 36 - 53 Investment policy 25%
Management, statements;
Selection & diversification;
Monitoring quantitative/qualitative
evaluation;
benchmarking; QDIA;
fee benchmarking
Plan Management, 54 - 70 Fee disclosure 25%
Fee Analysis & (408(b)(2), 404(a)(5));
Participant revenue sharing;
Communications participant education
vs. advice; plan audits;
fiduciary liability
,Examination Questions
Domain: Fiduciary Roles, Responsibilities & ERISA Regulations (Questions 1-18)
Question 1: Under ERISA Section 3(21), which of the following best defines a
fiduciary with respect to an employee benefit plan?
A. Any individual or entity that exercises discretionary authority over plan administration
B. Any person who provides investment advice for a fee
C. Any individual or entity that exercises any discretionary authority or discretionary control
respecting management of the plan or exercises any authority or control respecting
management or disposition of plan assets
D. Any employer who sponsors the plan regardless of decision-making authority
Correct Answer: C
Rationale: ERISA Section 3(21)(A) defines a fiduciary as any person who exercises any
discretionary authority or discretionary control respecting management of the plan or exercises
any authority or control respecting management or disposition of plan assets, renders
investment advice for a fee, or has any discretionary authority or responsibility in plan
administration.
Question 2: What is the primary duty established under ERISA Section 404(a)(1)(B)
for plan fiduciaries?
A. Maximize investment returns at all times
B. Diversify plan investments to minimize the risk of large losses
C. Select only the lowest-cost investment options available
D. Guarantee a minimum rate of return for participants
Correct Answer: B
Rationale: ERISA Section 404(a)(1)(B) requires fiduciaries to diversify plan investments so as
to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do
so. This is known as the diversification requirement.
Question 3: Under the prudent person standard established by ERISA Section
404(a)(1)(A), a fiduciary must act with which of the following?
A. Care, skill, prudence, and diligence that a prudent person acting in a like capacity and
familiar with such matters would use
B. Reasonable care as determined by the plan sponsor's internal policies
C. The level of care exercised by the average individual investor
D. Care consistent with maximizing returns within the plan's risk tolerance
Correct Answer: A
Rationale: ERISA Section 404(a)(1)(A) codifies the prudent person standard, requiring
fiduciaries to discharge their duties with the care, skill, prudence, and diligence that a prudent
person acting in a like capacity and familiar with such matters would use in light of the
purposes of the plan.
Question 4: Which of the following constitutes a prohibited transaction under
ERISA Section 406(a)?
A. Investing plan assets in a diversified mutual fund
B. A plan fiduciary causing the plan to engage in a transaction that constitutes a direct or
indirect sale or exchange of property between the plan and a party in interest
C. Hiring a qualified investment advisor to manage plan assets
D. A participant taking a loan from the plan in accordance with IRC Section 72(p)
Correct Answer: B
Rationale: ERISA Section 406(a)(1)(A) prohibits a fiduciary from causing the plan to engage
in a transaction that directly or indirectly involves the sale, exchange, or leasing of property
between the plan and a party in interest.
, Question 5: What is a 'party in interest' as defined under ERISA Section 3(14)?
A. Any individual who has expressed interest in joining the plan
B. Any person so defined under Section 3(14) including the employer, plan fiduciaries,
service providers, employees of the employer, and certain family members of such persons
C. Any participant or beneficiary of the plan
D. Any government regulatory agency overseeing the plan
Correct Answer: B
Rationale: ERISA Section 3(14) defines a party in interest broadly to include the plan sponsor,
fiduciaries, service providers to the plan, employees of the sponsor, and certain relatives of such
persons, among others.
Question 6: Under ERISA, which type of fiduciary liability insurance is required for
plan fiduciaries?
A. General commercial liability insurance
B. Fidelity bonds as required under Section 412
C. Errors and omissions insurance
D. Directors and officers liability insurance
Correct Answer: B
Rationale: ERISA Section 412 requires every fiduciary of an employee benefit plan, and every
person who handles funds or other property of such plan, to be bonded. The bond must be for at
least 10% of the amount of funds handled, subject to a minimum of $1,000.
Question 7: A 3(38) investment manager under ERISA is best described as:
A. An entity that provides investment recommendations to the plan fiduciary for final
approval
B. A fiduciary that has full discretionary authority to select, manage, and monitor plan
investments, thereby relieving the named fiduciary of investment-related liability
C. A non-fiduciary service provider that executes trades on behalf of the plan
D. A regulatory body that oversees plan investment compliance
Correct Answer: B
Rationale: Under ERISA Section 3(38), a 3(38) investment manager is a fiduciary that has full
discretionary authority and responsibility to manage plan assets, including the selection,
monitoring, and replacement of investments. The appointment of a properly qualified 3(38)
fiduciary relieves the appointing fiduciary of investment responsibility.
Question 8: Which of the following best describes the exclusive benefit rule under
ERISA?
A. Plan assets must be used exclusively to provide benefits to participants and their
beneficiaries and to defray reasonable plan administration expenses
B. Plan sponsors may use plan assets for corporate purposes if they are repaid with interest
C. Only highly compensated employees may receive plan benefits
D. Plan assets must be distributed to participants within 90 days of plan termination
Correct Answer: A
Rationale: The exclusive benefit rule requires that plan assets be used for the exclusive purpose
of providing benefits to participants and beneficiaries and defraying reasonable expenses of
administering the plan. This is codified in ERISA Section 404(a)(1)(A).
Question 9: Under ERISA Section 404(c), plan fiduciaries may be relieved of
liability for losses that result from a participant's exercise of control over their
account, provided which of the following conditions is met?
A. The participant signs a waiver of liability
B. The plan offers a broad range of investment alternatives, allows participants to give
investment instructions, and provides sufficient information for informed decision-making
C. The plan uses only index funds as investment options
Edition | Real Exam Questions with 100%
Verified Correct Answers
National Association of Plan Advisors (NAPA) Certified Plan Fiduciary Advisor |
Expert-Verified Q&A | Certification-Ready Format
Introduction
This document provides a comprehensive evaluation instrument for the NAPA Certified Plan
Fiduciary Advisor (CPFA) examination aligned with the 2026/2027 curriculum framework. The
70 questions presented herein span the four principal competency domains defined by the
National Association of Plan Advisors: fiduciary roles and responsibilities under ERISA
regulations, fiduciary oversight and plan administration, plan investment management and
monitoring, and plan management with fee analysis and participant communications. Each
question is accompanied by a verified correct answer and a detailed rationale grounded in current
ERISA statutory provisions, Department of Labor regulatory guidance, and established industry
standards for prudent plan management. The instrument is designed to assess an advisor's
capacity to fulfill fiduciary obligations, conduct prudent investment oversight, ensure regulatory
compliance, and safeguard the interests of plan participants and beneficiaries. All answers have
been verified against the most current regulatory frameworks to ensure accuracy and alignment
with the standards required for CPFA certification.
Content Area Overview
Content Area Questions Key Topics Weight
Fiduciary Roles, 1 - 18 ERISA sections 402(a), 25%
Responsibilities & 404, 3(21), 3(38);
ERISA Regulations prudent person
standard; prohibited
transactions; fiduciary
breach consequences
Fiduciary Oversight & 19 - 35 Plan governance; 25%
Plan Administration committee structure;
document retention;
SPD requirements;
compliance
monitoring; service
provider oversight
Plan Investment 36 - 53 Investment policy 25%
Management, statements;
Selection & diversification;
Monitoring quantitative/qualitative
evaluation;
benchmarking; QDIA;
fee benchmarking
Plan Management, 54 - 70 Fee disclosure 25%
Fee Analysis & (408(b)(2), 404(a)(5));
Participant revenue sharing;
Communications participant education
vs. advice; plan audits;
fiduciary liability
,Examination Questions
Domain: Fiduciary Roles, Responsibilities & ERISA Regulations (Questions 1-18)
Question 1: Under ERISA Section 3(21), which of the following best defines a
fiduciary with respect to an employee benefit plan?
A. Any individual or entity that exercises discretionary authority over plan administration
B. Any person who provides investment advice for a fee
C. Any individual or entity that exercises any discretionary authority or discretionary control
respecting management of the plan or exercises any authority or control respecting
management or disposition of plan assets
D. Any employer who sponsors the plan regardless of decision-making authority
Correct Answer: C
Rationale: ERISA Section 3(21)(A) defines a fiduciary as any person who exercises any
discretionary authority or discretionary control respecting management of the plan or exercises
any authority or control respecting management or disposition of plan assets, renders
investment advice for a fee, or has any discretionary authority or responsibility in plan
administration.
Question 2: What is the primary duty established under ERISA Section 404(a)(1)(B)
for plan fiduciaries?
A. Maximize investment returns at all times
B. Diversify plan investments to minimize the risk of large losses
C. Select only the lowest-cost investment options available
D. Guarantee a minimum rate of return for participants
Correct Answer: B
Rationale: ERISA Section 404(a)(1)(B) requires fiduciaries to diversify plan investments so as
to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do
so. This is known as the diversification requirement.
Question 3: Under the prudent person standard established by ERISA Section
404(a)(1)(A), a fiduciary must act with which of the following?
A. Care, skill, prudence, and diligence that a prudent person acting in a like capacity and
familiar with such matters would use
B. Reasonable care as determined by the plan sponsor's internal policies
C. The level of care exercised by the average individual investor
D. Care consistent with maximizing returns within the plan's risk tolerance
Correct Answer: A
Rationale: ERISA Section 404(a)(1)(A) codifies the prudent person standard, requiring
fiduciaries to discharge their duties with the care, skill, prudence, and diligence that a prudent
person acting in a like capacity and familiar with such matters would use in light of the
purposes of the plan.
Question 4: Which of the following constitutes a prohibited transaction under
ERISA Section 406(a)?
A. Investing plan assets in a diversified mutual fund
B. A plan fiduciary causing the plan to engage in a transaction that constitutes a direct or
indirect sale or exchange of property between the plan and a party in interest
C. Hiring a qualified investment advisor to manage plan assets
D. A participant taking a loan from the plan in accordance with IRC Section 72(p)
Correct Answer: B
Rationale: ERISA Section 406(a)(1)(A) prohibits a fiduciary from causing the plan to engage
in a transaction that directly or indirectly involves the sale, exchange, or leasing of property
between the plan and a party in interest.
, Question 5: What is a 'party in interest' as defined under ERISA Section 3(14)?
A. Any individual who has expressed interest in joining the plan
B. Any person so defined under Section 3(14) including the employer, plan fiduciaries,
service providers, employees of the employer, and certain family members of such persons
C. Any participant or beneficiary of the plan
D. Any government regulatory agency overseeing the plan
Correct Answer: B
Rationale: ERISA Section 3(14) defines a party in interest broadly to include the plan sponsor,
fiduciaries, service providers to the plan, employees of the sponsor, and certain relatives of such
persons, among others.
Question 6: Under ERISA, which type of fiduciary liability insurance is required for
plan fiduciaries?
A. General commercial liability insurance
B. Fidelity bonds as required under Section 412
C. Errors and omissions insurance
D. Directors and officers liability insurance
Correct Answer: B
Rationale: ERISA Section 412 requires every fiduciary of an employee benefit plan, and every
person who handles funds or other property of such plan, to be bonded. The bond must be for at
least 10% of the amount of funds handled, subject to a minimum of $1,000.
Question 7: A 3(38) investment manager under ERISA is best described as:
A. An entity that provides investment recommendations to the plan fiduciary for final
approval
B. A fiduciary that has full discretionary authority to select, manage, and monitor plan
investments, thereby relieving the named fiduciary of investment-related liability
C. A non-fiduciary service provider that executes trades on behalf of the plan
D. A regulatory body that oversees plan investment compliance
Correct Answer: B
Rationale: Under ERISA Section 3(38), a 3(38) investment manager is a fiduciary that has full
discretionary authority and responsibility to manage plan assets, including the selection,
monitoring, and replacement of investments. The appointment of a properly qualified 3(38)
fiduciary relieves the appointing fiduciary of investment responsibility.
Question 8: Which of the following best describes the exclusive benefit rule under
ERISA?
A. Plan assets must be used exclusively to provide benefits to participants and their
beneficiaries and to defray reasonable plan administration expenses
B. Plan sponsors may use plan assets for corporate purposes if they are repaid with interest
C. Only highly compensated employees may receive plan benefits
D. Plan assets must be distributed to participants within 90 days of plan termination
Correct Answer: A
Rationale: The exclusive benefit rule requires that plan assets be used for the exclusive purpose
of providing benefits to participants and beneficiaries and defraying reasonable expenses of
administering the plan. This is codified in ERISA Section 404(a)(1)(A).
Question 9: Under ERISA Section 404(c), plan fiduciaries may be relieved of
liability for losses that result from a participant's exercise of control over their
account, provided which of the following conditions is met?
A. The participant signs a waiver of liability
B. The plan offers a broad range of investment alternatives, allows participants to give
investment instructions, and provides sufficient information for informed decision-making
C. The plan uses only index funds as investment options
