CPFA Practice Exam (NAPA Questions) Practice Exam
Questions And Verified Answers Grade A+.
ERISA requires that fiduciaries manage the plan for the exclusive benefit of which
of the following parties?
a. Participants and their beneficiaries
b. Plan Sponsor
c. Plan Administrator
d. Business owner - ANSWER: a. Participants and their beneficiaries
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:
a. Give investment advice to participants
b. Fill the role of Plan Administrator
c. Follow a prudent process when hiring service providers
d. Sign and file the Form 5500 - ANSWER: a. Give investment advice to participants
Under ERISA, the Plan Administrator has the following roles, EXCEPT:
a. Providing participants with a summary plan description
b. Redesigning the plan's employer matching contribution formula
c. Distributing required notices to participants
d. Providing the plan document to participants who request a copy - ANSWER: b.
Redesigning the plan's employer matching contribution formula
Under ERISA, all of the following are Plan Trustee responsibilities, EXCEPT:
a. Monitor the investment manager whom the Plan Trustee hired.
b. Oversee the Plan Administrator.
c. Delegate specific investment duties to a service provider and monitor the service
provider's performance.
d. Follow participant directions for the investment of contributions, unless the
,instructions conflict with ERISA. - ANSWER: b. Oversee the Plan Administrator.
All of the following may be named fiduciaries in a plan document, EXCEPT:
a. Plan Sponsor
b. Plan Administrator
c. Plan Trustee
d. Legal counsel who prepares the plan document - ANSWER: d. Legal counsel who
prepares the plan document
Sue is a plan advisor for the ABC Retirement Plan. On the agenda for the upcoming
ABC Plan Committee meeting is an action item to replace Len and nominate a new
member to the Committee. Len has been asked to leave the Committee due to his
unsatisfactory attendance at monthly meetings. All of the following are best
practices regarding fiduciary changes, EXCEPT:
a. Per Len's request, the Committee minutes will exclude the reason Len was asked
to leave the committee.
b. Sue should educate the members on the importance of documenting fiduciary
changes.
c. The Committee minutes should document the process of naming Len's
replacement.
d. The new member should be informed of the goals of the Committee and
attendance requirements. - ANSWER: a. Per Len's request, the Committee minutes
will exclude the reason Len was asked to leave the committee.
Sharon is a 3(21) advisor. She is meeting with a potential client and is preparing for
her meeting. All of the following are services that Sharon may offer the prospect,
EXCEPT:
a. Attend the client's investment committee meetings.
b. Create the agendas for the client's investment committee meetings.
c. Assist with the review of the investments.
d. Make decision to replace funds on the watch list pursuant to the investment
policy statement, prior to attending the investment committee meeting. - ANSWER:
d. Make decision to replace funds on the watch list pursuant to the investment
policy statement, prior to attending the investment committee meeting.
All of the following represent potential breaches of fiduciary responsibility by plan
fiduciaries, EXCEPT:
, a. A Plan Trustee delegates some of his responsibilities to a discretionary trustee
who he continues to monitor.
b. A Plan Sponsor chooses a bank's recordkeeping service without performing due
diligence because the bank provides reduced rates on corporate banking services.
c. A Plan Trustee deposits weekly payroll deferrals at the end of the quarter.
d. A Plan Sponsor appoints a consultant to monitor the plan's service provider but
then ignores the consultant's findings. - ANSWER: a. A Plan Trustee delegates some
of his responsibilities to a discretionary trustee who he continues to monitor.
All of the following statements represent the DOL's role in overseeing plans,
EXCEPT:
a. Upon investigation the DOL may request information to identify whether a
prohibited transaction has occurred.
b. The DOL has provided correction methods for specific prohibited transactions.
c. The DOL and IRS work together to coordinate enforcement on prohibited
transaction issues.
d. A DOL investigation letter will usually ask for no more than five items related to
the plan's operation. - ANSWER: d. A DOL investigation letter will usually ask for no
more than five items related to the plan's operation.
Which statement regarding the IRS and DOL correction programs is TRUE?
a. The IRS and DOL correction programs cover identical plan errors.
b. The Voluntary Fiduciary Correction Program can be used only when an error is
found during a DOL investigation.
c. The DOL website includes an online calculator that calculates earnings amounts
to be paid to the plan.
d. The Employee Plans Compliance Resolution System is used to correct prohibited
transaction violations. - ANSWER: c. The DOL website includes an online calculator
that calculates earnings amounts to be paid to the plan.
All of the following statements describe characteristics of ERISA fidelity bonds and
fiduciary insurance, EXCEPT:
a. Fiduciary insurance may protect plan fiduciaries from losses resulting from
errors.
Questions And Verified Answers Grade A+.
ERISA requires that fiduciaries manage the plan for the exclusive benefit of which
of the following parties?
a. Participants and their beneficiaries
b. Plan Sponsor
c. Plan Administrator
d. Business owner - ANSWER: a. Participants and their beneficiaries
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:
a. Give investment advice to participants
b. Fill the role of Plan Administrator
c. Follow a prudent process when hiring service providers
d. Sign and file the Form 5500 - ANSWER: a. Give investment advice to participants
Under ERISA, the Plan Administrator has the following roles, EXCEPT:
a. Providing participants with a summary plan description
b. Redesigning the plan's employer matching contribution formula
c. Distributing required notices to participants
d. Providing the plan document to participants who request a copy - ANSWER: b.
Redesigning the plan's employer matching contribution formula
Under ERISA, all of the following are Plan Trustee responsibilities, EXCEPT:
a. Monitor the investment manager whom the Plan Trustee hired.
b. Oversee the Plan Administrator.
c. Delegate specific investment duties to a service provider and monitor the service
provider's performance.
d. Follow participant directions for the investment of contributions, unless the
,instructions conflict with ERISA. - ANSWER: b. Oversee the Plan Administrator.
All of the following may be named fiduciaries in a plan document, EXCEPT:
a. Plan Sponsor
b. Plan Administrator
c. Plan Trustee
d. Legal counsel who prepares the plan document - ANSWER: d. Legal counsel who
prepares the plan document
Sue is a plan advisor for the ABC Retirement Plan. On the agenda for the upcoming
ABC Plan Committee meeting is an action item to replace Len and nominate a new
member to the Committee. Len has been asked to leave the Committee due to his
unsatisfactory attendance at monthly meetings. All of the following are best
practices regarding fiduciary changes, EXCEPT:
a. Per Len's request, the Committee minutes will exclude the reason Len was asked
to leave the committee.
b. Sue should educate the members on the importance of documenting fiduciary
changes.
c. The Committee minutes should document the process of naming Len's
replacement.
d. The new member should be informed of the goals of the Committee and
attendance requirements. - ANSWER: a. Per Len's request, the Committee minutes
will exclude the reason Len was asked to leave the committee.
Sharon is a 3(21) advisor. She is meeting with a potential client and is preparing for
her meeting. All of the following are services that Sharon may offer the prospect,
EXCEPT:
a. Attend the client's investment committee meetings.
b. Create the agendas for the client's investment committee meetings.
c. Assist with the review of the investments.
d. Make decision to replace funds on the watch list pursuant to the investment
policy statement, prior to attending the investment committee meeting. - ANSWER:
d. Make decision to replace funds on the watch list pursuant to the investment
policy statement, prior to attending the investment committee meeting.
All of the following represent potential breaches of fiduciary responsibility by plan
fiduciaries, EXCEPT:
, a. A Plan Trustee delegates some of his responsibilities to a discretionary trustee
who he continues to monitor.
b. A Plan Sponsor chooses a bank's recordkeeping service without performing due
diligence because the bank provides reduced rates on corporate banking services.
c. A Plan Trustee deposits weekly payroll deferrals at the end of the quarter.
d. A Plan Sponsor appoints a consultant to monitor the plan's service provider but
then ignores the consultant's findings. - ANSWER: a. A Plan Trustee delegates some
of his responsibilities to a discretionary trustee who he continues to monitor.
All of the following statements represent the DOL's role in overseeing plans,
EXCEPT:
a. Upon investigation the DOL may request information to identify whether a
prohibited transaction has occurred.
b. The DOL has provided correction methods for specific prohibited transactions.
c. The DOL and IRS work together to coordinate enforcement on prohibited
transaction issues.
d. A DOL investigation letter will usually ask for no more than five items related to
the plan's operation. - ANSWER: d. A DOL investigation letter will usually ask for no
more than five items related to the plan's operation.
Which statement regarding the IRS and DOL correction programs is TRUE?
a. The IRS and DOL correction programs cover identical plan errors.
b. The Voluntary Fiduciary Correction Program can be used only when an error is
found during a DOL investigation.
c. The DOL website includes an online calculator that calculates earnings amounts
to be paid to the plan.
d. The Employee Plans Compliance Resolution System is used to correct prohibited
transaction violations. - ANSWER: c. The DOL website includes an online calculator
that calculates earnings amounts to be paid to the plan.
All of the following statements describe characteristics of ERISA fidelity bonds and
fiduciary insurance, EXCEPT:
a. Fiduciary insurance may protect plan fiduciaries from losses resulting from
errors.
