REGULATORY ENVIRONMENTS FOR BENEFITS
PROGRAMS EXAM: 400 QUESTIONS AND
ANSWERS WITH EXPLANATIONS
================================================================================
SECTION 1: ERISA - EMPLOYEE RETIREMENT INCOME SECURITY ACT (Questions 1-100)
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1. ERISA was enacted in what year?
A) 1972
B) 1974
C) 1976
D) 1978
Answer: B
Explanation: ERISA was enacted in 1974 to protect employee benefit plan participants.
2. Which federal agencies administer ERISA?
A) Department of Labor (DOL)
B) Internal Revenue Service (IRS)
C) Pension Benefit Guaranty Corporation (PBGC)
D) All of the above
Answer: D
Explanation: ERISA is jointly administered by DOL, IRS, and PBGC.
3. ERISA applies to which types of benefit plans?
A) Pension and retirement plans
,B) Welfare benefit plans (health, disability, etc.)
C) Both A and B
D) Only pension plans
Answer: C
Explanation: ERISA covers both retirement plans and welfare benefit plans.
4. Which of the following plans is EXEMPT from ERISA coverage?
A) Corporate pension plan
B) Taft-Hartley multiemployer plan
C) Governmental plan
D) 401(k) plan
Answer: C
Explanation: Governmental plans, church plans, and plans maintained solely for
compliance with workers' comp are exempt.
5. The "prudent man rule" under ERISA requires fiduciaries to act:
A) With care an ordinary prudent person would exercise
B) With maximum possible return regardless of risk
C) According to participant directions only
D) To minimize employer cost
Answer: A
Explanation: ERISA Section 404 requires fiduciaries to act prudently and solely in
interest of participants.
6. ERISA Section 404(c) provides relief from fiduciary liability when:
A) Plan has low fees
B) Participants exercise control over their investments
,C) Employer contributes matching funds
D) Plan is fully funded
Answer: B
Explanation: Section 404(c) relief applies when participants direct their own
investments.
7. To qualify for 404(c) protection, participants must be offered at least how many
investment options?
A) 1
B) 3
C) 5
D) 7
Answer: B
Explanation: Minimum 3 diversified investment options with different risk/return
characteristics.
8. ERISA requires that plan assets be held in:
A) Employer's general account
B) Trust or custodial account
C) Participant's personal accounts
D) Any bank account
Answer: B
Explanation: ERISA requires plan assets be held in trust for participants.
9. Who is considered a fiduciary under ERISA?
A) Plan administrator
B) Investment advisor
, C) Trustee
D) All of the above
Answer: D
Explanation: Anyone with discretionary authority over plan management or assets is a
fiduciary.
10. Named fiduciaries must be identified in:
A) Summary Plan Description
B) Annual Report
C) Trust agreement
D) Both A and C
Answer: D
Explanation: Named fiduciaries identified in plan document and SPD.
11. Fiduciary duties include:
A) Exclusive benefit rule
B) Diversification
C) Adherence to plan documents
D) All of the above
Answer: D
Explanation: ERISA Section 404 requires exclusive benefit, prudence, diversification,
and adherence to documents.
12. Prohibited transactions under ERISA include:
A) Sale of property between plan and party-in-interest
B) Loan to party-in-interest
C) Furnishing goods/services to party-in-interest
PROGRAMS EXAM: 400 QUESTIONS AND
ANSWERS WITH EXPLANATIONS
================================================================================
SECTION 1: ERISA - EMPLOYEE RETIREMENT INCOME SECURITY ACT (Questions 1-100)
================================================================================
1. ERISA was enacted in what year?
A) 1972
B) 1974
C) 1976
D) 1978
Answer: B
Explanation: ERISA was enacted in 1974 to protect employee benefit plan participants.
2. Which federal agencies administer ERISA?
A) Department of Labor (DOL)
B) Internal Revenue Service (IRS)
C) Pension Benefit Guaranty Corporation (PBGC)
D) All of the above
Answer: D
Explanation: ERISA is jointly administered by DOL, IRS, and PBGC.
3. ERISA applies to which types of benefit plans?
A) Pension and retirement plans
,B) Welfare benefit plans (health, disability, etc.)
C) Both A and B
D) Only pension plans
Answer: C
Explanation: ERISA covers both retirement plans and welfare benefit plans.
4. Which of the following plans is EXEMPT from ERISA coverage?
A) Corporate pension plan
B) Taft-Hartley multiemployer plan
C) Governmental plan
D) 401(k) plan
Answer: C
Explanation: Governmental plans, church plans, and plans maintained solely for
compliance with workers' comp are exempt.
5. The "prudent man rule" under ERISA requires fiduciaries to act:
A) With care an ordinary prudent person would exercise
B) With maximum possible return regardless of risk
C) According to participant directions only
D) To minimize employer cost
Answer: A
Explanation: ERISA Section 404 requires fiduciaries to act prudently and solely in
interest of participants.
6. ERISA Section 404(c) provides relief from fiduciary liability when:
A) Plan has low fees
B) Participants exercise control over their investments
,C) Employer contributes matching funds
D) Plan is fully funded
Answer: B
Explanation: Section 404(c) relief applies when participants direct their own
investments.
7. To qualify for 404(c) protection, participants must be offered at least how many
investment options?
A) 1
B) 3
C) 5
D) 7
Answer: B
Explanation: Minimum 3 diversified investment options with different risk/return
characteristics.
8. ERISA requires that plan assets be held in:
A) Employer's general account
B) Trust or custodial account
C) Participant's personal accounts
D) Any bank account
Answer: B
Explanation: ERISA requires plan assets be held in trust for participants.
9. Who is considered a fiduciary under ERISA?
A) Plan administrator
B) Investment advisor
, C) Trustee
D) All of the above
Answer: D
Explanation: Anyone with discretionary authority over plan management or assets is a
fiduciary.
10. Named fiduciaries must be identified in:
A) Summary Plan Description
B) Annual Report
C) Trust agreement
D) Both A and C
Answer: D
Explanation: Named fiduciaries identified in plan document and SPD.
11. Fiduciary duties include:
A) Exclusive benefit rule
B) Diversification
C) Adherence to plan documents
D) All of the above
Answer: D
Explanation: ERISA Section 404 requires exclusive benefit, prudence, diversification,
and adherence to documents.
12. Prohibited transactions under ERISA include:
A) Sale of property between plan and party-in-interest
B) Loan to party-in-interest
C) Furnishing goods/services to party-in-interest
