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CPFA EXAM QUESTIONS AND
ANSWERS 100% PASS
Which statement regarding service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices. - ANS A) A TPA
performs annual compliance testing.
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. - ANS A) Provides efficient
contribution and distribution processes.
Based on behavioral finance research, which of the following is a best practice for producing
successful participant outcomes?
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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. - ANS A)
Combining auto-enrollment with targeted education.
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. - ANS C) DEF has the
right to "opt out" and be excluded from the related group.
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. - ANS A) Adding an employer matching contribution
equal to 25% up to 12% of compensation deferred.
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?
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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? -
ANS B) Can participants convert their existing contribution accounts to Roth accounts?
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? - ANS B) Does
the company have an established line of credit?
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. - ANS B) Has at least two partners.
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.
CPFA EXAM QUESTIONS AND
ANSWERS 100% PASS
Which statement regarding service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices. - ANS A) A TPA
performs annual compliance testing.
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. - ANS A) Provides efficient
contribution and distribution processes.
Based on behavioral finance research, which of the following is a best practice for producing
successful participant outcomes?
, ©THESTAR 2025 ALL RIGHTS RESERVED
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. - ANS A)
Combining auto-enrollment with targeted education.
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. - ANS C) DEF has the
right to "opt out" and be excluded from the related group.
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. - ANS A) Adding an employer matching contribution
equal to 25% up to 12% of compensation deferred.
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?
, ©THESTAR 2025 ALL RIGHTS RESERVED
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? -
ANS B) Can participants convert their existing contribution accounts to Roth accounts?
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? - ANS B) Does
the company have an established line of credit?
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. - ANS B) Has at least two partners.
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.
