CEBS RPA 1 PRACTICE TEST WITH CORRECT
ANSWERS | RATED A+
1.
Which retirement plan emphasizes a guaranteed benefit amount at retirement based on a
predetermined formula?
• Defined Contribution Plan
• Profit-Sharing Plan
• Defined Benefit Plan
• Tax-Deferred Annuity Plan
2.
What is the basic purpose of ERISA?
3.
A company is implementing a new 401(k) plan and needs to select a QDIA. If the company
chooses a stable value fund as the QDIA, what potential issues could arise regarding compliance
with ERISA regulations?
• Stable value funds are not recognized as QDIAs, which could expose the company to
fiduciary liability.
• Stable value funds typically offer higher returns than other QDIAs, which could lead to
participant dissatisfaction.
• Stable value funds require participants to actively manage their investments, which
contradicts the purpose of a QDIA.
• Stable value funds are too risky for participants, leading to potential losses.
4.
Which type of retirement plan is characterized by employees contributing a portion of their
salary into an individual account, allowing for tax-deferred growth?
• a. A defined benefit plan.
• b. A cash balance plan.
• c. A profit-sharing plan.
ANSWERS | RATED A+
1.
Which retirement plan emphasizes a guaranteed benefit amount at retirement based on a
predetermined formula?
• Defined Contribution Plan
• Profit-Sharing Plan
• Defined Benefit Plan
• Tax-Deferred Annuity Plan
2.
What is the basic purpose of ERISA?
3.
A company is implementing a new 401(k) plan and needs to select a QDIA. If the company
chooses a stable value fund as the QDIA, what potential issues could arise regarding compliance
with ERISA regulations?
• Stable value funds are not recognized as QDIAs, which could expose the company to
fiduciary liability.
• Stable value funds typically offer higher returns than other QDIAs, which could lead to
participant dissatisfaction.
• Stable value funds require participants to actively manage their investments, which
contradicts the purpose of a QDIA.
• Stable value funds are too risky for participants, leading to potential losses.
4.
Which type of retirement plan is characterized by employees contributing a portion of their
salary into an individual account, allowing for tax-deferred growth?
• a. A defined benefit plan.
• b. A cash balance plan.
• c. A profit-sharing plan.
