CPFA LICENSE PRACTICE SCRIPT
UPDATED 2026 TESTED SOLUTIONS
⫸ A) Provides efficient contribution and distribution processes.
Answer: Which statement regarding bundled service arrangements is
TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service
arrangement.
C) Permits for specific single provider within the arrangement to be
easily removed and replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company.
⫸ A) Combining auto-enrollment with targeted education. Answer:
Based on behavioral finance research, which of the following is a best
practice for producing successful participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision
making.
,⫸ C) DEF has the right to "opt out" and be excluded from the related
group. Answer: Company ABC and Company DEF are determined to be
part of a related group of companies. All the following are TRUE
except:
A) The employees of both ABC and DEF may end up participating in
one plan.
B) ABC may be required to make contributions for its employees into
DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related
group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan.
⫸ A) Adding an employer matching contribution equal to 25% up to
12% of compensation deferred. Answer: Which of the following plan
designs may result in better participant deferral behavior?
A) Adding an employer matching contribution equal to 25% up to 12%
of compensation deferred.
B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer
matching contribution.
D) Adding a profit-sharing contribution.
⫸ B) Can participants convert their existing contribution accounts to
Roth accounts? Answer: An advisor is meeting with a Plan Sponsor to
,discuss contribution design in her plan. All of the following questions
will help with this conversation, EXCEPT:
A) Is there a goal that employees should be required to contribute to
receive an employer contribution?
B) Can participants convert their existing contribution accounts to Roth
accounts?
C) Is there a group of employees who are unlikely to participate in the
plan?
D) How important is it that employees are on track for adequate
retirement income?
⫸ B) Does the company have an established line of credit? Answer:
Jake is a sole proprietor and has just established a software development
company. He has recently hired two employees. Currently, the company
does not have a good cash flow, but if Jake can hire more software
engineers, growth and profits should increase. Based on that
information, all of the following are questions that an advisor should ask
when establishing a plan for Jake's company, EXCEPT:
A) Can the company's current cash flow support employer
contributions?
B) Does the company have an established line of credit?
C) What are Jake's objectives for attracting future employees?
D) Is Jake willing to make a fixed contribution if it enables him to save
more?
, ⫸ B) Has at least two partners. Answer: A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120.
⫸ A) A plan advisor should inform the employer that required
contributions will be waived for any year that the company does not
make a profit. Answer: All of the following describe the impact of a
business's cash flow and budget when establishing a plan, EXCEPT:
A) A plan advisor should inform the employer that required
contributions will be waived for any year that the company does not
make a profit.
B) A plan advisor should explain a plan's contribution commitment to
the employer.
C) Employers should have a stable cash flow if they are considering
adopting a Defined Benefit/Defined Contribution combination plan.
D) A plan advisor may work with the service provider to show estimates
of what employer contributions would be under different contribution
formulas.
⫸ B) Average deferral rate of participants in the plan. Answer: Which
of the following reports can be used in measuring plan effectiveness and
participant outcomes?
UPDATED 2026 TESTED SOLUTIONS
⫸ A) Provides efficient contribution and distribution processes.
Answer: Which statement regarding bundled service arrangements is
TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service
arrangement.
C) Permits for specific single provider within the arrangement to be
easily removed and replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company.
⫸ A) Combining auto-enrollment with targeted education. Answer:
Based on behavioral finance research, which of the following is a best
practice for producing successful participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision
making.
,⫸ C) DEF has the right to "opt out" and be excluded from the related
group. Answer: Company ABC and Company DEF are determined to be
part of a related group of companies. All the following are TRUE
except:
A) The employees of both ABC and DEF may end up participating in
one plan.
B) ABC may be required to make contributions for its employees into
DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related
group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan.
⫸ A) Adding an employer matching contribution equal to 25% up to
12% of compensation deferred. Answer: Which of the following plan
designs may result in better participant deferral behavior?
A) Adding an employer matching contribution equal to 25% up to 12%
of compensation deferred.
B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer
matching contribution.
D) Adding a profit-sharing contribution.
⫸ B) Can participants convert their existing contribution accounts to
Roth accounts? Answer: An advisor is meeting with a Plan Sponsor to
,discuss contribution design in her plan. All of the following questions
will help with this conversation, EXCEPT:
A) Is there a goal that employees should be required to contribute to
receive an employer contribution?
B) Can participants convert their existing contribution accounts to Roth
accounts?
C) Is there a group of employees who are unlikely to participate in the
plan?
D) How important is it that employees are on track for adequate
retirement income?
⫸ B) Does the company have an established line of credit? Answer:
Jake is a sole proprietor and has just established a software development
company. He has recently hired two employees. Currently, the company
does not have a good cash flow, but if Jake can hire more software
engineers, growth and profits should increase. Based on that
information, all of the following are questions that an advisor should ask
when establishing a plan for Jake's company, EXCEPT:
A) Can the company's current cash flow support employer
contributions?
B) Does the company have an established line of credit?
C) What are Jake's objectives for attracting future employees?
D) Is Jake willing to make a fixed contribution if it enables him to save
more?
, ⫸ B) Has at least two partners. Answer: A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120.
⫸ A) A plan advisor should inform the employer that required
contributions will be waived for any year that the company does not
make a profit. Answer: All of the following describe the impact of a
business's cash flow and budget when establishing a plan, EXCEPT:
A) A plan advisor should inform the employer that required
contributions will be waived for any year that the company does not
make a profit.
B) A plan advisor should explain a plan's contribution commitment to
the employer.
C) Employers should have a stable cash flow if they are considering
adopting a Defined Benefit/Defined Contribution combination plan.
D) A plan advisor may work with the service provider to show estimates
of what employer contributions would be under different contribution
formulas.
⫸ B) Average deferral rate of participants in the plan. Answer: Which
of the following reports can be used in measuring plan effectiveness and
participant outcomes?
