CPFA EXAM with correct answers

CPFA EXAM with correct answers
Which Statement regarding service providers is TRUE? - answers1. A TPA performs
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annual compliance testing 2. A recordkeeper has the legal obligation to provide an
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interpretation of a plan provision. 3. An accountant processes the "money out" for a
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participant withdrawal. 4. A plan advisor is responsible for drafting annual safe harbor
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notices.
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1.

all of the following are important factors when selecting a service provider, EXCEPT: -
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answers1. Service provider's financial stability. 2. experience with plans of similar size
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and complexity. 3. willingness to provide revenue sharing to offset plan fees. 4.
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qualifications of personnel that will service the plan
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3.

which statement regarding bundled service arrangements is TRUE? - answers1. Provides
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efficient contribution and distribution processes. 2. requires less fiduciary oversight than
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an unbundled service arrangement. 3. permits for a specific single provider within the
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arrangement to be easily removed and replaced with another provider. 4. typical
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arrangement involves a TPA and an insurance company?
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1.

company abc and company def are determined to be part of a related group of companies.
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all of the following statements are TRUE, EXCEPT: - answers1. the employees of both
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abc and def may end up participating in one plan. 2. abc may be required to make
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contributions for its employees in def's plan. def has the right to "opt out" and be excluded
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from the related group. 4. if def adopts a plan, abc employees may be eligible for the plan.
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3.

which of the following plan deigns may result in better participant deferral behavior? 1.
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adding an employer matching contribution equal to 25% up to 12% of compensation
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deferred. 2. adding a 3% nonelective safe harbor contribution. 3. adding a profit sharing
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contribution - answers1.
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an advisor is meeting with a plan sponsor to discuss contribution in her plan. all of the
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following questions will help with this conversation, EXCEPT - answers1. is there a goal
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that employees should be required to contribute to receive an employer contribution? 2.
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Can participants convert their existing contribution accounts to roth accounts? 3. Is there
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a group of employees who are unlikely to participate in the plan? How important is it that
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employees are on track for adequate retirement income?
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, 2.

all of the following service providers may assist with plan document maintenance, except -
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answers1. ERISA attorney. 2. Recordkeeper. 3. TPA firm. 4. Plan auditor
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4.

which statement regarding to and through target date funds are true? - answers1. if a
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majority of participants cash out of a plan upon retirement, a through strategy may be
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appropriate. 2. a to target date fund may be a good choice if many retirees have account
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balances in the plan. 3. a key difference between to and through target date funds are
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their glide paths. 4. a through target date fund develops its asset allocation based on the
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participant's risk tolerance.
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3.

All of the following are characteristics of target date funds except, : - answers1. they are
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designed so that the equity portion decreases as the fund nears a specified date. 2. they
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are diversified to minimize the risk of large losses. 3. they can be used to reduce fiduciary
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liability under the QDIA rules. 4. they require less fiduciary oversight than other types of
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funds.
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4.

all of the following statements regarding the timing of investment meetings are true,
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except: - answers1. an investment policy statement (IPS) must specifically state how
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often the investments are reviewed. 2. a plan advisor may assist in the scheduling of
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investment meetings. 3. an IPS should be reviewed at least annually. 4. smaller, owner-
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driven plans typically perform an annual investment review.
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4.

which statement regarding investment options is true? - answers1. asset allocation funds
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are designed to be the sole investment for a participant. 2. Collective investment funds
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are managed by insurance companies. 3. Balanced funds are designed to shift to more
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conservative investments as the participant ages. 4. Stable value funds are a good choice
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for a qualified default investment alternative.
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1.

all of the following are characteristics of asset allocation funds, except: - answers1. target
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date funds automatically shift their asset allocation as a participant advances toward
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retirement. 2. lifestyle funds do not accommodate a participant's change in risk tolerance.
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