CPFA Study Guide – Ultimate Guide With
Complete Solutions
Title II: Specific Conditions for Tax Qualification of Qualified
Retirement Plans Correct Answer - The IRS generally
administers Title II of ERISA, as well as the standards of Title I of
ERISA that address vesting, participation, nondiscrimination, and
funding.
The goal of Title II was to create tax provisions that parallel and
reflect the provisions of Title I. Correct Answer - Plans must: •
max cont. limits • Tax the employer on plan asset reversions; • Limit
max tax-deductible conts for the employer and ppt; • Permanent; •
In writing to ees; • Vesting • Not favor HCEs; and • Uniform
distribution rules
Title III: The Jurisdiction, Administration, and Enforcement of ERISA
Correct Answer - Title III coordination between the IRS and DOL,
as well as the IRS's and DOL's authority to enforce ERISA provisions.
Today, the IRS is primarily responsible for the participation,
funding, and vesting rules, while the DOL is primarily responsible
for the reporting, disclosure, and fiduciary standards of conduct
Title IV: PBGC and Termination Insurance Programs for Defined
Benefit Plans. Correct Answer - This title of ERISA established
the Pension Benefit Guaranty Corporation (PBGC) as a government
owned corporation to protect the retirement income of participants
and beneficiaries in private sector defined benefit pension plans.
Settlor Non-Fiduciary Functions Correct Answer - The settlor
is the individual or entity that creates the Trust, which holds
employee elective deferrals and employer contributions. Settlor
functions are not subject to fiduciary duty. They typically relate to
, plan design—for example, the establishment of a plan,
determination of whom the plan will cover, and design of the benefit
offerings.
Discretionary Authority Fiduciary Functions Correct Answer -
ERISA1 defines a fiduciary to a plan to be any person who: 1.
Exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or
control respecting management or disposition of its assets; 2.
Renders investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property of such
plan, or has any authority or responsibility to do so; or 3. Has any
discretionary authority or discretionary responsibility in the
administration of such plan.
Named Fiduciary Correct Answer - Named fiduciaries usually
include the plan sponsor, the plan trustee, and the plan
administrator.
The Trustee has the sole authority for: Correct Answer -
Safekeeping of plan assets; • Prudent investment management; •
Pursuing monies owed to the trust, including monies distributed
incorrectly and those not contributed on time; • Following
participant directions in accordance with plan document provisions
in participant directed plans, unless those directions conflict with
ERISA; • Prudently selecting and monitoring service providers, such
as investment managers and custodians; and • Ensuring that any
expenses paid by the trust at the discretion of the Trustee are
reasonable and refusing to pay from the trust any fees if payment of
those fees would conflict with ERISA or the plan document.
Plan Administrator - The Plan "COO" Correct Answer -
Providing info to ppts, when required by law or regulation; •
Providing participants SPD and SAR; • Filing the Form 5500 Annual
Complete Solutions
Title II: Specific Conditions for Tax Qualification of Qualified
Retirement Plans Correct Answer - The IRS generally
administers Title II of ERISA, as well as the standards of Title I of
ERISA that address vesting, participation, nondiscrimination, and
funding.
The goal of Title II was to create tax provisions that parallel and
reflect the provisions of Title I. Correct Answer - Plans must: •
max cont. limits • Tax the employer on plan asset reversions; • Limit
max tax-deductible conts for the employer and ppt; • Permanent; •
In writing to ees; • Vesting • Not favor HCEs; and • Uniform
distribution rules
Title III: The Jurisdiction, Administration, and Enforcement of ERISA
Correct Answer - Title III coordination between the IRS and DOL,
as well as the IRS's and DOL's authority to enforce ERISA provisions.
Today, the IRS is primarily responsible for the participation,
funding, and vesting rules, while the DOL is primarily responsible
for the reporting, disclosure, and fiduciary standards of conduct
Title IV: PBGC and Termination Insurance Programs for Defined
Benefit Plans. Correct Answer - This title of ERISA established
the Pension Benefit Guaranty Corporation (PBGC) as a government
owned corporation to protect the retirement income of participants
and beneficiaries in private sector defined benefit pension plans.
Settlor Non-Fiduciary Functions Correct Answer - The settlor
is the individual or entity that creates the Trust, which holds
employee elective deferrals and employer contributions. Settlor
functions are not subject to fiduciary duty. They typically relate to
, plan design—for example, the establishment of a plan,
determination of whom the plan will cover, and design of the benefit
offerings.
Discretionary Authority Fiduciary Functions Correct Answer -
ERISA1 defines a fiduciary to a plan to be any person who: 1.
Exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or
control respecting management or disposition of its assets; 2.
Renders investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property of such
plan, or has any authority or responsibility to do so; or 3. Has any
discretionary authority or discretionary responsibility in the
administration of such plan.
Named Fiduciary Correct Answer - Named fiduciaries usually
include the plan sponsor, the plan trustee, and the plan
administrator.
The Trustee has the sole authority for: Correct Answer -
Safekeeping of plan assets; • Prudent investment management; •
Pursuing monies owed to the trust, including monies distributed
incorrectly and those not contributed on time; • Following
participant directions in accordance with plan document provisions
in participant directed plans, unless those directions conflict with
ERISA; • Prudently selecting and monitoring service providers, such
as investment managers and custodians; and • Ensuring that any
expenses paid by the trust at the discretion of the Trustee are
reasonable and refusing to pay from the trust any fees if payment of
those fees would conflict with ERISA or the plan document.
Plan Administrator - The Plan "COO" Correct Answer -
Providing info to ppts, when required by law or regulation; •
Providing participants SPD and SAR; • Filing the Form 5500 Annual
