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CPFA EXAM (Certified Plan Fiduciary Advisor)
EXAM WITH COMPLETE 250 QUESTIONS AND
CORRECT SOLUTIONS AND RATIONALES JUST
RELEASED THIS YEAR 2025-2026
1. Under ERISA, which of the following best defines the "prudent expert" standard for
fiduciaries?
• A) A fiduciary must act as a layperson with ordinary business sense.
• B) A fiduciary must act with the care, skill, and caution that a prudent person would use,
assuming the fiduciary possesses expertise in the subject matter.
• C) A fiduciary must guarantee investment returns.
• D) A fiduciary must follow the plan sponsor's instructions without question.
Answer: B
The "prudent expert" rule requires fiduciaries to act with the care, skill, and caution that a
prudent person would use, assuming the fiduciary has expertise in the area of decision-making .
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2. Which duty requires a fiduciary to place the interests of plan participants above the
fiduciary's own interests?
• A) Duty of diversification
• B) Duty of loyalty
• C) Duty of prudence
• D) Duty of disclosure
Answer: B
The duty of loyalty obligates fiduciaries to act solely in the best interests of participants and
beneficiaries, avoiding self-dealing or conflicts of interest .
3. A "named fiduciary" under ERISA is:
• A) Any person who performs a fiduciary function, regardless of title.
• B) An individual explicitly listed in the plan document as a fiduciary.
• C) A service provider who offers investment advice but has no decision-making
authority.
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• D) The plan sponsor's CFO.
Answer: B
Named fiduciaries are those specifically identified in the plan document as fiduciaries, giving
them clear legal responsibility .
4. Which of the following is an example of a functional fiduciary?
• A) The plan's investment committee that selects investment options.
• B) The payroll processor who merely distributes contributions.
• C) An external accountant preparing the Form 5500.
• D) The insurance carrier providing group life coverage.
Answer: A
Functional fiduciaries are individuals who perform fiduciary functions (e.g., investment selection)
even if they are not named in the plan document .
5. ERISA §3(21) fiduciaries differ from §3(38) investment managers primarily because:
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• A) §3(21) fiduciaries have discretionary authority over plan assets.
• B) §3(38) managers provide advice only, while the sponsor makes final decisions.
• C) §3(21) fiduciaries give advice, but the sponsor retains final investment authority.
• D) §3(38) managers are exempt from the fiduciary duties of prudence.
Answer: C
A §3(21) fiduciary provides investment advice, but the plan sponsor retains ultimate decision-
making authority; a §3(38) investment manager has full discretionary control over plan assets .
6. Which transaction would be considered a prohibited self-dealing transaction under ERISA?
• A) Purchasing office supplies from a vendor that also provides fiduciary services.
• B) The fiduciary buying plan assets for his personal account.
• C) The plan purchasing shares of a mutual fund offered by the plan's recordkeeper.
• D) The plan paying reasonable compensation for services.
CPFA EXAM (Certified Plan Fiduciary Advisor)
EXAM WITH COMPLETE 250 QUESTIONS AND
CORRECT SOLUTIONS AND RATIONALES JUST
RELEASED THIS YEAR 2025-2026
1. Under ERISA, which of the following best defines the "prudent expert" standard for
fiduciaries?
• A) A fiduciary must act as a layperson with ordinary business sense.
• B) A fiduciary must act with the care, skill, and caution that a prudent person would use,
assuming the fiduciary possesses expertise in the subject matter.
• C) A fiduciary must guarantee investment returns.
• D) A fiduciary must follow the plan sponsor's instructions without question.
Answer: B
The "prudent expert" rule requires fiduciaries to act with the care, skill, and caution that a
prudent person would use, assuming the fiduciary has expertise in the area of decision-making .
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2. Which duty requires a fiduciary to place the interests of plan participants above the
fiduciary's own interests?
• A) Duty of diversification
• B) Duty of loyalty
• C) Duty of prudence
• D) Duty of disclosure
Answer: B
The duty of loyalty obligates fiduciaries to act solely in the best interests of participants and
beneficiaries, avoiding self-dealing or conflicts of interest .
3. A "named fiduciary" under ERISA is:
• A) Any person who performs a fiduciary function, regardless of title.
• B) An individual explicitly listed in the plan document as a fiduciary.
• C) A service provider who offers investment advice but has no decision-making
authority.
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• D) The plan sponsor's CFO.
Answer: B
Named fiduciaries are those specifically identified in the plan document as fiduciaries, giving
them clear legal responsibility .
4. Which of the following is an example of a functional fiduciary?
• A) The plan's investment committee that selects investment options.
• B) The payroll processor who merely distributes contributions.
• C) An external accountant preparing the Form 5500.
• D) The insurance carrier providing group life coverage.
Answer: A
Functional fiduciaries are individuals who perform fiduciary functions (e.g., investment selection)
even if they are not named in the plan document .
5. ERISA §3(21) fiduciaries differ from §3(38) investment managers primarily because:
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• A) §3(21) fiduciaries have discretionary authority over plan assets.
• B) §3(38) managers provide advice only, while the sponsor makes final decisions.
• C) §3(21) fiduciaries give advice, but the sponsor retains final investment authority.
• D) §3(38) managers are exempt from the fiduciary duties of prudence.
Answer: C
A §3(21) fiduciary provides investment advice, but the plan sponsor retains ultimate decision-
making authority; a §3(38) investment manager has full discretionary control over plan assets .
6. Which transaction would be considered a prohibited self-dealing transaction under ERISA?
• A) Purchasing office supplies from a vendor that also provides fiduciary services.
• B) The fiduciary buying plan assets for his personal account.
• C) The plan purchasing shares of a mutual fund offered by the plan's recordkeeper.
• D) The plan paying reasonable compensation for services.
