CPFA exam GUARANTEED PASS!!
Under the DOL regulation, many advisors to retirement plans and their participants will be - (ANSWER)3(21)
fiduciaries. They will act alongside other fiduciary service providers who are also not necessarily named in the
plan document but who exercise discretionary control over plan provisions or plan investments.
The advisor should educate the - (ANSWER)plan sponsor about hiring fiduciary service providers, including
the different roles service providers, including the different roles service providers may take on within the plan,
how to select a qualified candidate, and the plan sponsor's ongoing responsibility to monitor them.
The fiduciary definition has two parts: - (ANSWER)who is a fiduciary
to what extent the person is a fiduciary
Clarifying fiduciary status is arguably incomplete without addressing both.
A best practice for a service provider's formal description of services might therefore include two parts: -
(ANSWER)a. an acknowledgment of fiduciary status
b. clarification as to the extent of responsibilities
As a non-fiduciary advisor, you can - (ANSWER)educate your client and present possible investments for the
Retirement Plan Committee consideration.
If you recommend a specific fund replacement to the plan sponsor or plan participants, you are considered to be
- (ANSWER)giving investment advice and are therefore a functional fiduciary to the plan.
If fiduciaries of participants use your recommendations - as opposed to information - to make investment
decisions, this could be considered - (ANSWER)a fiduciary act
As a non-fiduciary advisor, you can meet with your client on a recurring basis (quarterly, annually, etc) if
providing - (ANSWER)general investment reports or discussing the appropriateness of the investments to the
plan without making specific investment suggestions.
Plan fiduciaries will almost always have to hire - (ANSWER)service providers for their plan under their ERISA
"duty to obtain expert assistance."
Page 1 of 18
,As a best practice, the advisor can help fiduciaries select: - (ANSWER)the service providers, which usually
includes a TPA and a record keeper.
In owner driven smaller plans, the advisor can assist the - (ANSWER)plan sponsor's HR staff - which is likely
to be one person in working with the various plan service providers.
In larger participant driven plans, the advisor can work with - (ANSWER)the HR director, CFO, and the
retirement plan committee to evaluate service providers.
A 3(21) fiduciary does not serve as a fiduciary investment manager, but instead usually as -
(ANSWER)investment advice fiduciary
f your client wants an advisor to manager plan investments, or just the QDIA, they can hire a -
(ANSWER)3(38) fiduciary advisor.
A 3(21) fiduciary advisors can recommend investments but the final decision on which investments to choose is
up to the - (ANSWER)plan fiduciaries.
A 3(16) plan administrator can take on administrative duties for the plan but does not act in - (ANSWER)an
investment capacity.
A non-fiduciary advisors can provide - (ANSWER)education
The DOL is not required to be notified if - (ANSWER)the plan hires a 3(21) advisor.
The fiduciaries should do a review of the service provider qualifications in order to prove a -
(ANSWER)prudent process was not followed when selecting the service provider. They should also review the
service agreement, document the decision process, and have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a - (ANSWER)fiduciary to the plan, but different than advisors working
as 3(38) fiduciaries, it is rarely named in the plan document.
Page 2 of 18
, The service agreement between the plan sponsor and the TPA is what determines if - (ANSWER)a TPA will
work as a 3(16) fiduciary Plan Administrator.
ERISA 3(16) fiduciaries serve as the - (ANSWER)"Plan Administrator" and are responsible for administrative
responsibilities in the plan. These include assuring the plan operation remains in compliance with the plan
document, providing administrative and compliance documents for the fiduciary file and assuring that employee
notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as - (ANSWER)investment fiduciaries and their main duty under
ERISA is to provide investment advice.
3(38) fiduciaries may also serve as the - (ANSWER)named investment manager for the plan, and unlike 3(21)
investment advice fiduciaries, will have discretionary control over plan investments.
Employee education through enrollment meetings is performed by - (ANSWER)retirement plan advisors,
including non-fiduciary, 3(21), and 3(38) fiduciary advisors. Assisting with fiduciary file documentation is
another function that all retirement plan advisors, both fiduciary and non-fiduciary are likely to perform.
As the advisor, you can assist the plan sponsor by - (ANSWER)by asking about documents he or she may be
missing from the fiduciary file.
For example:
Are there any plan amendments?
Does he or she have copies of the required participant notices (including participant fee disclosure) and account
statements?
Where are the 408(b)(2) fee disclosure notices?
Does he or she have evidence that looked at the fee disclosure to determine if plan fees are reasonable?
You can also assist the plan sponsor in identifying the - (ANSWER)plan service providers who may have
copies of these documents, and assist him in setting up a fiduciary file.
You may also want to show the sponsor a - (ANSWER)sample DOL investigation letter, so he is aware of what
the DOL might ask in advance of an investigation. You can point out that unsigned documents or amendments
and/or missing and incomplete plan documentation may put him at risk in an audit.
Page 3 of 18
Under the DOL regulation, many advisors to retirement plans and their participants will be - (ANSWER)3(21)
fiduciaries. They will act alongside other fiduciary service providers who are also not necessarily named in the
plan document but who exercise discretionary control over plan provisions or plan investments.
The advisor should educate the - (ANSWER)plan sponsor about hiring fiduciary service providers, including
the different roles service providers, including the different roles service providers may take on within the plan,
how to select a qualified candidate, and the plan sponsor's ongoing responsibility to monitor them.
The fiduciary definition has two parts: - (ANSWER)who is a fiduciary
to what extent the person is a fiduciary
Clarifying fiduciary status is arguably incomplete without addressing both.
A best practice for a service provider's formal description of services might therefore include two parts: -
(ANSWER)a. an acknowledgment of fiduciary status
b. clarification as to the extent of responsibilities
As a non-fiduciary advisor, you can - (ANSWER)educate your client and present possible investments for the
Retirement Plan Committee consideration.
If you recommend a specific fund replacement to the plan sponsor or plan participants, you are considered to be
- (ANSWER)giving investment advice and are therefore a functional fiduciary to the plan.
If fiduciaries of participants use your recommendations - as opposed to information - to make investment
decisions, this could be considered - (ANSWER)a fiduciary act
As a non-fiduciary advisor, you can meet with your client on a recurring basis (quarterly, annually, etc) if
providing - (ANSWER)general investment reports or discussing the appropriateness of the investments to the
plan without making specific investment suggestions.
Plan fiduciaries will almost always have to hire - (ANSWER)service providers for their plan under their ERISA
"duty to obtain expert assistance."
Page 1 of 18
,As a best practice, the advisor can help fiduciaries select: - (ANSWER)the service providers, which usually
includes a TPA and a record keeper.
In owner driven smaller plans, the advisor can assist the - (ANSWER)plan sponsor's HR staff - which is likely
to be one person in working with the various plan service providers.
In larger participant driven plans, the advisor can work with - (ANSWER)the HR director, CFO, and the
retirement plan committee to evaluate service providers.
A 3(21) fiduciary does not serve as a fiduciary investment manager, but instead usually as -
(ANSWER)investment advice fiduciary
f your client wants an advisor to manager plan investments, or just the QDIA, they can hire a -
(ANSWER)3(38) fiduciary advisor.
A 3(21) fiduciary advisors can recommend investments but the final decision on which investments to choose is
up to the - (ANSWER)plan fiduciaries.
A 3(16) plan administrator can take on administrative duties for the plan but does not act in - (ANSWER)an
investment capacity.
A non-fiduciary advisors can provide - (ANSWER)education
The DOL is not required to be notified if - (ANSWER)the plan hires a 3(21) advisor.
The fiduciaries should do a review of the service provider qualifications in order to prove a -
(ANSWER)prudent process was not followed when selecting the service provider. They should also review the
service agreement, document the decision process, and have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a - (ANSWER)fiduciary to the plan, but different than advisors working
as 3(38) fiduciaries, it is rarely named in the plan document.
Page 2 of 18
, The service agreement between the plan sponsor and the TPA is what determines if - (ANSWER)a TPA will
work as a 3(16) fiduciary Plan Administrator.
ERISA 3(16) fiduciaries serve as the - (ANSWER)"Plan Administrator" and are responsible for administrative
responsibilities in the plan. These include assuring the plan operation remains in compliance with the plan
document, providing administrative and compliance documents for the fiduciary file and assuring that employee
notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as - (ANSWER)investment fiduciaries and their main duty under
ERISA is to provide investment advice.
3(38) fiduciaries may also serve as the - (ANSWER)named investment manager for the plan, and unlike 3(21)
investment advice fiduciaries, will have discretionary control over plan investments.
Employee education through enrollment meetings is performed by - (ANSWER)retirement plan advisors,
including non-fiduciary, 3(21), and 3(38) fiduciary advisors. Assisting with fiduciary file documentation is
another function that all retirement plan advisors, both fiduciary and non-fiduciary are likely to perform.
As the advisor, you can assist the plan sponsor by - (ANSWER)by asking about documents he or she may be
missing from the fiduciary file.
For example:
Are there any plan amendments?
Does he or she have copies of the required participant notices (including participant fee disclosure) and account
statements?
Where are the 408(b)(2) fee disclosure notices?
Does he or she have evidence that looked at the fee disclosure to determine if plan fees are reasonable?
You can also assist the plan sponsor in identifying the - (ANSWER)plan service providers who may have
copies of these documents, and assist him in setting up a fiduciary file.
You may also want to show the sponsor a - (ANSWER)sample DOL investigation letter, so he is aware of what
the DOL might ask in advance of an investigation. You can point out that unsigned documents or amendments
and/or missing and incomplete plan documentation may put him at risk in an audit.
Page 3 of 18
