Chartered Retirement Plan Specialist (CRPS):
Questions With In-Depth Solutions
ERISA administration is divided among all of the following government
agencies except the Right Ans - =A)SEC.
B)PBGC.
C)DOL.
D)IRS.
Explanation
ERISA administration is divided among the Department of Labor (DOL), the
Internal Revenue Service of the Department of the Treasury (IRS), and the
Pension Benefit Guaranty Corporation (PBGC). The SEC regulates investment
advisers, but not ERISA administration.
LO 1-1
ERISA eligibility requires attainment of age 21 and one year of service. One
year of service is defined as working Right Ans - A)at least 100 hours a
month during the year.
B)full-time for one year.
=C)at least 1,000 hours during the year.
D)a full calendar year.
Explanation
One year of service is defined as working at least 1,000 hours during the year.
LO 1-1
What is the maximum length of a vesting schedule allowed for a defined
benefit pension plan? Right Ans - A) 6 years
B) 5 years
=C) 7 years
D) 3 years
Explanation
The maximum vesting schedule allowed for a defined benefit plan (that is not
top-heavy) is 3- to 7-year graded.
LO 1-1
The primary reason that ERISA was passed into law was to protect Right
Ans - A) participants in defined benefit plans only.
=B) participants in company sponsored retirement plans.
, C) all retirement savers and investors.
D) retirement plan sponsors from lawsuits.
Explanation
ERISA was passed primarily to provide certain protections to plan
participants in company-sponsored retirement plans, which can be defined
benefit or defined contribution plans.
LO 1-1
Which one of the following statements is correct regarding the summary plan
description (SPD)? Right Ans - A) It must be updated and distributed every
time there is any material modification to a plan.
B) It is the legal agreement establishing the terms of the retirement plan trust.
=C) It is meant to be a summary and should be understandable to the average
participant.
D) It is the document that investment advisers use to manage the retirement
plan's assets.
Explanation
The SPD is meant to be a summary of the plan and it should be
understandable by plan participants. The legal agreements establishing the
retirement plan is referred to as the adoption agreement. When there is a
material modification then a summary of material modification (SMM) must
be filed. Investment advisers often use an investment policy statement (IPS)
to provide a roadmap for managing investments.
LO 1-1
Which one of the following is a correct statement about the plan administrator
in a retirement plan covered by ERISA? Right Ans - A) The plan
administrator is also the trustee for the plan.
B) The plan administrator must perform all administrative functions.
C) The plan administrator cannot be an employee of the company sponsoring
the plan.
=D) The plan administrator can outsource certain administrative functions.
Explanation
The plan administrator must ensure that the plan is in compliance with
various standards and reporting requirements, however it is not unusual for a
plan administrator to use a third-party administrative (TPA) firm for many
administrative functions. The trustee of the plan is not necessarily also the
plan administrator.
LO 1-1
Questions With In-Depth Solutions
ERISA administration is divided among all of the following government
agencies except the Right Ans - =A)SEC.
B)PBGC.
C)DOL.
D)IRS.
Explanation
ERISA administration is divided among the Department of Labor (DOL), the
Internal Revenue Service of the Department of the Treasury (IRS), and the
Pension Benefit Guaranty Corporation (PBGC). The SEC regulates investment
advisers, but not ERISA administration.
LO 1-1
ERISA eligibility requires attainment of age 21 and one year of service. One
year of service is defined as working Right Ans - A)at least 100 hours a
month during the year.
B)full-time for one year.
=C)at least 1,000 hours during the year.
D)a full calendar year.
Explanation
One year of service is defined as working at least 1,000 hours during the year.
LO 1-1
What is the maximum length of a vesting schedule allowed for a defined
benefit pension plan? Right Ans - A) 6 years
B) 5 years
=C) 7 years
D) 3 years
Explanation
The maximum vesting schedule allowed for a defined benefit plan (that is not
top-heavy) is 3- to 7-year graded.
LO 1-1
The primary reason that ERISA was passed into law was to protect Right
Ans - A) participants in defined benefit plans only.
=B) participants in company sponsored retirement plans.
, C) all retirement savers and investors.
D) retirement plan sponsors from lawsuits.
Explanation
ERISA was passed primarily to provide certain protections to plan
participants in company-sponsored retirement plans, which can be defined
benefit or defined contribution plans.
LO 1-1
Which one of the following statements is correct regarding the summary plan
description (SPD)? Right Ans - A) It must be updated and distributed every
time there is any material modification to a plan.
B) It is the legal agreement establishing the terms of the retirement plan trust.
=C) It is meant to be a summary and should be understandable to the average
participant.
D) It is the document that investment advisers use to manage the retirement
plan's assets.
Explanation
The SPD is meant to be a summary of the plan and it should be
understandable by plan participants. The legal agreements establishing the
retirement plan is referred to as the adoption agreement. When there is a
material modification then a summary of material modification (SMM) must
be filed. Investment advisers often use an investment policy statement (IPS)
to provide a roadmap for managing investments.
LO 1-1
Which one of the following is a correct statement about the plan administrator
in a retirement plan covered by ERISA? Right Ans - A) The plan
administrator is also the trustee for the plan.
B) The plan administrator must perform all administrative functions.
C) The plan administrator cannot be an employee of the company sponsoring
the plan.
=D) The plan administrator can outsource certain administrative functions.
Explanation
The plan administrator must ensure that the plan is in compliance with
various standards and reporting requirements, however it is not unusual for a
plan administrator to use a third-party administrative (TPA) firm for many
administrative functions. The trustee of the plan is not necessarily also the
plan administrator.
LO 1-1
