NAPA CPFA Certification Exam –
National Association of Plan Advisors Certified
Plan Fiduciary Advisor - 2026/2027 |
250 Verified Questions & Answers With Rationales
The NAPA CPFA Certification Exam is the premier credential for retirement plan advisors
seeking to demonstrate expertise in fiduciary best practices and retirement plan management.
This comprehensive study guide contains 250 meticulously verified questions that mirror the
actual exam's content, difficulty, and format. Designed for 2026/2027 candidates, this
resource reflects the latest ERISA and DOL guidelines, including the 2026 DOL fiduciary rule
updates, expanded ESG considerations, and new cybersecurity requirements for plan sponsors.
Each question is accompanied by a detailed rationale explaining the correct answer and
common misconceptions, citing relevant ERISA sections, DOL guidance, and industry best
practices. The material is organized to cover all key domains: fiduciary standards and ERISA
compliance, plan design and investment fiduciary duties, participant communication and
education, regulatory updates and best practices, risk management and plan governance, and
ethical and legal responsibilities.
SECTION 1: FIDUCIARY STANDARDS AND ERISA COMPLIANCE
Q1. A plan sponsor of a 401(k) plan with $50 million in assets is considering replacing the
current recordkeeper due to service issues. The advisor recommends issuing a request for
proposal (RFP) to three providers. Which of the following actions would most likely violate
the fiduciary duty of prudence under ERISA Section 404(a)(1)(B)?
A. Including only providers that use a bundled fee structure to simplify comparison
B. Requiring all responding providers to disclose both explicit and implicit fees in a
standardized format
C. Engaging an independent third-party consultant to evaluate the proposals
D. Documenting the rationale for the final selection in plan committee minutes
Correct Answer: A
Rationale: Limiting the RFP to only bundled fee providers arbitrarily restricts the pool
without a documented reason, potentially failing the prudent process. ERISA requires a
thorough, objective search.
,Reference: ERISA Section 404(a)(1)(B); DOL Interpretive Bulletin 96-1
Q2. A plan fiduciary is evaluating a target-date fund (TDF) series for a 401(k) plan. The
TDF uses a to-retirement glide path that reaches its most conservative allocation five years
after the target date. Which of the following is a key consideration under the DOL's 2013
TDF guidance?
A. The glide path design must be identical for all participants regardless of account
balance.
B. The fiduciary must compare the TDF's fees to a peer group of similar TDFs.
C. The fiduciary must ensure the TDF's asset allocation at the target date matches a static
60/40 equity/fixed income ratio.
D. The TDF must offer a guaranteed minimum return at retirement.
Correct Answer: B
Rationale: DOL guidance emphasizes that fiduciaries should evaluate TDF fees relative to
comparable funds, as fees directly impact retirement savings. There is no mandated static
allocation or guaranteed return.
Reference: DOL Target Date Retirement Fund Guidance (2013); Field Assistance Bulletin
2013-03
Q3. An advisor is reviewing the investment policy statement (IPS) for a defined
contribution plan. The IPS currently states that the plan will offer 15 investment options,
including a company stock fund. Under ERISA, which of the following is a permissible
restriction on participant-directed investments?
A. Prohibiting participants from transferring out of the company stock fund until age 55
B. Limiting participants to one exchange per month between funds
C. Requiring participants to obtain spousal consent before changing their investment
elections
D. Excluding participants with balances below $1,000 from selecting certain funds
Correct Answer: B
Rationale: ERISA Section 404(c) permits reasonable restrictions on trading frequency to
protect participants from excessive trading and associated costs, as long as they are
disclosed.
Reference: ERISA Section 404(c); 29 CFR § 2550.404c-1
,Q4. A plan sponsor receives a proposal from a service provider that includes revenue
sharing from mutual funds to offset recordkeeping fees. The provider offers to credit the
revenue sharing to the plan's forfeiture account rather than to participant accounts. Under
ERISA, which of the following is the most appropriate fiduciary action?
A. Accept the proposal because revenue sharing can be used to pay plan expenses as
long as it is reasonable.
B. Reject the proposal because revenue sharing must always be allocated to participant
accounts proportionally.
C. Require that the revenue sharing be used exclusively to reduce future employer
contributions.
D. Request a written opinion from the provider that the arrangement does not constitute a
prohibited transaction.
Correct Answer: A
Rationale: Revenue sharing can be used to pay reasonable plan expenses, including
recordkeeping, as long as the total fees are reasonable. Crediting to forfeiture account is
permissible.
Reference: ERISA Section 404(a); DOL Advisory Opinion 97-164
Q5. Which of the following individuals is automatically considered a fiduciary under
ERISA due to their role in the plan?
A. A third-party administrator who performs only ministerial functions
B. An investment advisor who provides recommendations but does not have discretionary
authority
C. A plan trustee who has discretionary authority over plan assets
D. A recordkeeper who processes participant loan requests
Correct Answer: C
Rationale: ERISA Section 3(21)(A) defines a fiduciary as anyone who exercises
discretionary authority or control over plan assets. A trustee with discretionary authority is
automatically a fiduciary.
Reference: ERISA Section 3(21)(A)
, Q6. A plan fiduciary is considering hiring a new investment manager. Under ERISA Section
405, which of the following is true regarding fiduciary liability for co-fiduciaries?
A. A fiduciary is never liable for the actions of another appointed fiduciary.
B. A fiduciary is liable if they fail to monitor the performance of an appointed fiduciary.
C. Liability only applies if the fiduciary personally benefited from the breach.
D. Co-fiduciary liability only applies to investment managers, not trustees.
Correct Answer: B
Rationale: ERISA Section 405 imposes co-fiduciary liability when a fiduciary fails to
monitor the conduct of other fiduciaries or fails to act when knowing of a breach.
Reference: ERISA Section 405(a)
Q7. Under the 2026 DOL fiduciary rule updates, which of the following activities would
most likely trigger fiduciary status for a financial professional?
A. Providing general educational information about retirement plans
B. Recommending that a participant roll over their 401(k) balance to an IRA
C. Distributing a list of investment options without making specific recommendations
D. Responding to participant questions about plan features
Correct Answer: B
Rationale: The 2026 DOL fiduciary rule expands the definition of fiduciary advice to
include recommendations to roll over plan assets to IRAs when the professional receives
compensation.
Reference: 2026 DOL Fiduciary Rule Updates; ERISA Section 3(21)(A)(ii)
Q8. A plan sponsor operates a 401(k) plan with 150 participants. The sponsor receives a
gift of a $500 meal from a recordkeeper during a plan review meeting. Under ERISA,
which of the following is true?
A. The gift is acceptable as long as it is disclosed to all participants.
B. The gift is a prohibited transaction if it influences the selection of the recordkeeper.
C. The gift is acceptable because it is below the $1,000 threshold for prohibited
transactions.
D. The gift is acceptable if the recordkeeper provides the same gift to all plan sponsors.
National Association of Plan Advisors Certified
Plan Fiduciary Advisor - 2026/2027 |
250 Verified Questions & Answers With Rationales
The NAPA CPFA Certification Exam is the premier credential for retirement plan advisors
seeking to demonstrate expertise in fiduciary best practices and retirement plan management.
This comprehensive study guide contains 250 meticulously verified questions that mirror the
actual exam's content, difficulty, and format. Designed for 2026/2027 candidates, this
resource reflects the latest ERISA and DOL guidelines, including the 2026 DOL fiduciary rule
updates, expanded ESG considerations, and new cybersecurity requirements for plan sponsors.
Each question is accompanied by a detailed rationale explaining the correct answer and
common misconceptions, citing relevant ERISA sections, DOL guidance, and industry best
practices. The material is organized to cover all key domains: fiduciary standards and ERISA
compliance, plan design and investment fiduciary duties, participant communication and
education, regulatory updates and best practices, risk management and plan governance, and
ethical and legal responsibilities.
SECTION 1: FIDUCIARY STANDARDS AND ERISA COMPLIANCE
Q1. A plan sponsor of a 401(k) plan with $50 million in assets is considering replacing the
current recordkeeper due to service issues. The advisor recommends issuing a request for
proposal (RFP) to three providers. Which of the following actions would most likely violate
the fiduciary duty of prudence under ERISA Section 404(a)(1)(B)?
A. Including only providers that use a bundled fee structure to simplify comparison
B. Requiring all responding providers to disclose both explicit and implicit fees in a
standardized format
C. Engaging an independent third-party consultant to evaluate the proposals
D. Documenting the rationale for the final selection in plan committee minutes
Correct Answer: A
Rationale: Limiting the RFP to only bundled fee providers arbitrarily restricts the pool
without a documented reason, potentially failing the prudent process. ERISA requires a
thorough, objective search.
,Reference: ERISA Section 404(a)(1)(B); DOL Interpretive Bulletin 96-1
Q2. A plan fiduciary is evaluating a target-date fund (TDF) series for a 401(k) plan. The
TDF uses a to-retirement glide path that reaches its most conservative allocation five years
after the target date. Which of the following is a key consideration under the DOL's 2013
TDF guidance?
A. The glide path design must be identical for all participants regardless of account
balance.
B. The fiduciary must compare the TDF's fees to a peer group of similar TDFs.
C. The fiduciary must ensure the TDF's asset allocation at the target date matches a static
60/40 equity/fixed income ratio.
D. The TDF must offer a guaranteed minimum return at retirement.
Correct Answer: B
Rationale: DOL guidance emphasizes that fiduciaries should evaluate TDF fees relative to
comparable funds, as fees directly impact retirement savings. There is no mandated static
allocation or guaranteed return.
Reference: DOL Target Date Retirement Fund Guidance (2013); Field Assistance Bulletin
2013-03
Q3. An advisor is reviewing the investment policy statement (IPS) for a defined
contribution plan. The IPS currently states that the plan will offer 15 investment options,
including a company stock fund. Under ERISA, which of the following is a permissible
restriction on participant-directed investments?
A. Prohibiting participants from transferring out of the company stock fund until age 55
B. Limiting participants to one exchange per month between funds
C. Requiring participants to obtain spousal consent before changing their investment
elections
D. Excluding participants with balances below $1,000 from selecting certain funds
Correct Answer: B
Rationale: ERISA Section 404(c) permits reasonable restrictions on trading frequency to
protect participants from excessive trading and associated costs, as long as they are
disclosed.
Reference: ERISA Section 404(c); 29 CFR § 2550.404c-1
,Q4. A plan sponsor receives a proposal from a service provider that includes revenue
sharing from mutual funds to offset recordkeeping fees. The provider offers to credit the
revenue sharing to the plan's forfeiture account rather than to participant accounts. Under
ERISA, which of the following is the most appropriate fiduciary action?
A. Accept the proposal because revenue sharing can be used to pay plan expenses as
long as it is reasonable.
B. Reject the proposal because revenue sharing must always be allocated to participant
accounts proportionally.
C. Require that the revenue sharing be used exclusively to reduce future employer
contributions.
D. Request a written opinion from the provider that the arrangement does not constitute a
prohibited transaction.
Correct Answer: A
Rationale: Revenue sharing can be used to pay reasonable plan expenses, including
recordkeeping, as long as the total fees are reasonable. Crediting to forfeiture account is
permissible.
Reference: ERISA Section 404(a); DOL Advisory Opinion 97-164
Q5. Which of the following individuals is automatically considered a fiduciary under
ERISA due to their role in the plan?
A. A third-party administrator who performs only ministerial functions
B. An investment advisor who provides recommendations but does not have discretionary
authority
C. A plan trustee who has discretionary authority over plan assets
D. A recordkeeper who processes participant loan requests
Correct Answer: C
Rationale: ERISA Section 3(21)(A) defines a fiduciary as anyone who exercises
discretionary authority or control over plan assets. A trustee with discretionary authority is
automatically a fiduciary.
Reference: ERISA Section 3(21)(A)
, Q6. A plan fiduciary is considering hiring a new investment manager. Under ERISA Section
405, which of the following is true regarding fiduciary liability for co-fiduciaries?
A. A fiduciary is never liable for the actions of another appointed fiduciary.
B. A fiduciary is liable if they fail to monitor the performance of an appointed fiduciary.
C. Liability only applies if the fiduciary personally benefited from the breach.
D. Co-fiduciary liability only applies to investment managers, not trustees.
Correct Answer: B
Rationale: ERISA Section 405 imposes co-fiduciary liability when a fiduciary fails to
monitor the conduct of other fiduciaries or fails to act when knowing of a breach.
Reference: ERISA Section 405(a)
Q7. Under the 2026 DOL fiduciary rule updates, which of the following activities would
most likely trigger fiduciary status for a financial professional?
A. Providing general educational information about retirement plans
B. Recommending that a participant roll over their 401(k) balance to an IRA
C. Distributing a list of investment options without making specific recommendations
D. Responding to participant questions about plan features
Correct Answer: B
Rationale: The 2026 DOL fiduciary rule expands the definition of fiduciary advice to
include recommendations to roll over plan assets to IRAs when the professional receives
compensation.
Reference: 2026 DOL Fiduciary Rule Updates; ERISA Section 3(21)(A)(ii)
Q8. A plan sponsor operates a 401(k) plan with 150 participants. The sponsor receives a
gift of a $500 meal from a recordkeeper during a plan review meeting. Under ERISA,
which of the following is true?
A. The gift is acceptable as long as it is disclosed to all participants.
B. The gift is a prohibited transaction if it influences the selection of the recordkeeper.
C. The gift is acceptable because it is below the $1,000 threshold for prohibited
transactions.
D. The gift is acceptable if the recordkeeper provides the same gift to all plan sponsors.
