TGPC® – TAX-EXEMPT & GOVERNMENTAL PLAN
CONSULTANT CERTIFICATION PRACTICE EXAM |
100 MULTIPLE-CHOICE QUESTIONS WITH DETAILED
ANSWER RATIONALES
1. A governmental defined benefit retirement plan is generally established by:
A. A private manufacturing corporation
B. A federal, state, or local government employer
C. A labor union only
D. A nonprofit charity
Rationale: Governmental retirement plans are sponsored by federal, state, local,
or other governmental entities for public employees.
2. Which Internal Revenue Code section primarily governs qualified retirement
plans?
A. Section 457
B. Section 401(a)
C. Section 403(b)
D. Section 125
Rationale: Section 401(a) establishes the qualification requirements for tax-
qualified retirement plans.
3. A governmental 457(b) plan differs from a qualified 401(a) plan because it:
A. Cannot accept employee contributions
B. Must be funded only with insurance contracts
C. Is subject to a separate section of the Internal Revenue Code
,D. Is available only to teachers
Rationale: Governmental 457(b) plans are governed by IRC Section 457 rather than
Section 401(a).
4. Which organization generally administers federal tax law affecting
retirement plans?
A. Department of Labor
B. Internal Revenue Service (IRS)
C. Securities and Exchange Commission
D. Federal Reserve
Rationale: The IRS enforces federal tax laws governing qualified retirement plans.
5. Governmental plans are generally exempt from which federal law?
A. Internal Revenue Code
B. ERISA Title I
C. Federal income taxation rules
D. Medicare taxation
Rationale: Governmental plans are generally exempt from ERISA Title I reporting
and fiduciary provisions.
6. A 403(b) plan is primarily designed for:
A. For-profit corporations
B. Public schools and certain tax-exempt organizations
C. Federal agencies only
D. Partnerships
Rationale: Public educational institutions and many tax-exempt organizations
commonly sponsor 403(b) plans.
, 7. Which plan type is commonly sponsored by state and local governments?
A. SIMPLE IRA
B. 457(b) Plan
C. SEP IRA
D. ESOP
Rationale: State and local governmental employers frequently sponsor
governmental 457(b) deferred compensation plans.
8. Vesting refers to:
A. Annual contribution limits
B. An employee's nonforfeitable right to benefits
C. Investment diversification
D. Required distributions
Rationale: Vesting determines when participants gain permanent ownership of
employer-provided benefits.
9. Employee elective deferrals are:
A. Mandatory employer contributions
B. Contributions employees choose to make from compensation
C. Payroll taxes
D. Loan repayments
Rationale: Elective deferrals are voluntary salary reduction contributions made by
employees.
10.Which participant is generally eligible for catch-up contributions?
A. Age 25
B. Age 40
CONSULTANT CERTIFICATION PRACTICE EXAM |
100 MULTIPLE-CHOICE QUESTIONS WITH DETAILED
ANSWER RATIONALES
1. A governmental defined benefit retirement plan is generally established by:
A. A private manufacturing corporation
B. A federal, state, or local government employer
C. A labor union only
D. A nonprofit charity
Rationale: Governmental retirement plans are sponsored by federal, state, local,
or other governmental entities for public employees.
2. Which Internal Revenue Code section primarily governs qualified retirement
plans?
A. Section 457
B. Section 401(a)
C. Section 403(b)
D. Section 125
Rationale: Section 401(a) establishes the qualification requirements for tax-
qualified retirement plans.
3. A governmental 457(b) plan differs from a qualified 401(a) plan because it:
A. Cannot accept employee contributions
B. Must be funded only with insurance contracts
C. Is subject to a separate section of the Internal Revenue Code
,D. Is available only to teachers
Rationale: Governmental 457(b) plans are governed by IRC Section 457 rather than
Section 401(a).
4. Which organization generally administers federal tax law affecting
retirement plans?
A. Department of Labor
B. Internal Revenue Service (IRS)
C. Securities and Exchange Commission
D. Federal Reserve
Rationale: The IRS enforces federal tax laws governing qualified retirement plans.
5. Governmental plans are generally exempt from which federal law?
A. Internal Revenue Code
B. ERISA Title I
C. Federal income taxation rules
D. Medicare taxation
Rationale: Governmental plans are generally exempt from ERISA Title I reporting
and fiduciary provisions.
6. A 403(b) plan is primarily designed for:
A. For-profit corporations
B. Public schools and certain tax-exempt organizations
C. Federal agencies only
D. Partnerships
Rationale: Public educational institutions and many tax-exempt organizations
commonly sponsor 403(b) plans.
, 7. Which plan type is commonly sponsored by state and local governments?
A. SIMPLE IRA
B. 457(b) Plan
C. SEP IRA
D. ESOP
Rationale: State and local governmental employers frequently sponsor
governmental 457(b) deferred compensation plans.
8. Vesting refers to:
A. Annual contribution limits
B. An employee's nonforfeitable right to benefits
C. Investment diversification
D. Required distributions
Rationale: Vesting determines when participants gain permanent ownership of
employer-provided benefits.
9. Employee elective deferrals are:
A. Mandatory employer contributions
B. Contributions employees choose to make from compensation
C. Payroll taxes
D. Loan repayments
Rationale: Elective deferrals are voluntary salary reduction contributions made by
employees.
10.Which participant is generally eligible for catch-up contributions?
A. Age 25
B. Age 40
