CPFA Exam 2027 with all Correct & 100% Verified
Answers |Actual Complete Update |Already Graded A+
Which statement regarding service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices. ✔Correct Answer-A) A
TPA performs annual compliance testing.
Which statement regarding bundled service arrangements is TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service arrangement.
C) Permits for specific single provider within the arrangement to be easily removed and
replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company. ✔Correct Answer-A)
Provides efficient contribution and distribution processes.
Based on behavioral finance research, which of the following is a best practice for producing
successful participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision making. ✔Correct
Answer-A) Combining auto-enrollment with targeted education.
Company ABC and Company DEF are determined to be part of a related group of companies. All
the following are TRUE except:
A) The employees of both ABC and DEF may end up participating in one plan.
B) ABC may be required to make contributions for its employees into DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan. ✔Correct Answer-C) DEF
has the right to "opt out" and be excluded from the related group.
Which of the following plan designs may result in better participant deferral behavior?
A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred.
,B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer matching contribution.
D) Adding a profit-sharing contribution. ✔Correct Answer-A) Adding an employer matching
contribution equal to 25% up to 12% of compensation deferred.
An advisor is meeting with a Plan Sponsor to discuss contribution design in her plan. All of the
following questions will help with this conversation, EXCEPT:
A) Is there a goal that employees should be required to contribute to receive an employer
contribution?
B) Can participants convert their existing contribution accounts to Roth accounts?
C) Is there a group of employees who are unlikely to participate in the plan?
D) How important is it that employees are on track for adequate retirement income?
✔Correct Answer-B) Can participants convert their existing contribution accounts to Roth
accounts?
Jake is a sole proprietor and has just established a software development company. He has
recently hired two employees. Currently, the company does not have a good cash flow, but if
Jake can hire more software engineers, growth and profits should increase. Based on that
information, all of the following are questions that an advisor should ask when establishing a
plan for Jake's company, EXCEPT:
A) Can the company's current cash flow support employer contributions?
B) Does the company have an established line of credit?
C) What are Jake's objectives for attracting future employees?
D) Is Jake willing to make a fixed contribution if it enables him to save more? ✔Correct
Answer-B) Does the company have an established line of credit?
A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120. ✔Correct Answer-B) Has at least two partners.
All of the following describe the impact of a business's cash flow and budget when establishing
a plan, EXCEPT:
A) A plan advisor should inform the employer that required contributions will be waived for any
year that the company does not make a profit.
B) A plan advisor should explain a plan's contribution commitment to the employer.
C) Employers should have a stable cash flow if they are considering adopting a Defined
Benefit/Defined Contribution combination plan.
, D) A plan advisor may work with the service provider to show estimates of what employer
contributions would be under different contribution formulas. ✔Correct Answer-A) A plan
advisor should inform the employer that required contributions will be waived for any year that
the company does not make a profit.
Which of the following reports can be used in measuring plan effectiveness and participant
outcomes?
A) Number of terminated participants who elected to roll their accounts into IRAs.
B) Average deferral rate of participants in the plan.
C) Independent accountant's required annual audit of the plan.
D) Summary Annual Report. ✔Correct Answer-B) Average deferral rate of participants in the
plan.
All of the following are benefits of participant retirement readiness, EXCEPT:
A) Employers can better manage their workforce needs.
B) Participants receive a guarantee of lifetime income payments.
C) Employees may be more satisfied with their jobs when working for an employer that actively
promotes retirement readiness programs.
D) Employers can work with service providers who have tools to assist participants in increasing
retirement savings. ✔Correct Answer-B) Participants receive a guarantee of lifetime income
payments.
All of following are items to consider when developing a strategy to promote successful
participant outcomes, EXCEPT:
A) What is the average life expectancy for the participants' beneficiaries?
B) Should investment advice be offered?
C) Is senior level management interested in promoting "retirement readiness"?
D) What type of participant education should be provided? ✔Correct Answer-A) What is the
average life expectancy for the participants' beneficiaries?
All of the following statements describe the re-enrollment process of reinvesting participant
accounts in the plan's asset allocation funds, EXCEPT:
A) The re-enrollment of participant accounts is considered a behavioral finance method.
B) Participants are given the opportunity to "opt-out" of the re-enrollment of their account
balances.
C) The goal of the re-enrollment process is to improve participant outcomes by automatically
investing their account balances in asset allocation funds appropriate for their age.
D) Participant notices are not required. ✔Correct Answer-D) Participant notices are not
required.
Answers |Actual Complete Update |Already Graded A+
Which statement regarding service providers is TRUE?
A) A TPA performs annual compliance testing.
B) A recordkeeper has the legal obligation to provide an interpretation of a plan provision.
C) An accountant processes the "money out" for a participant account.
D) A plan advisor is responsible for drafting annual safe harbor notices. ✔Correct Answer-A) A
TPA performs annual compliance testing.
Which statement regarding bundled service arrangements is TRUE?
A) Provides efficient contribution and distribution processes.
B) Requires less fiduciary oversight than an unbundled service arrangement.
C) Permits for specific single provider within the arrangement to be easily removed and
replaced with another provider.
D) Typical arrangement involves a TPA and an insurance company. ✔Correct Answer-A)
Provides efficient contribution and distribution processes.
Based on behavioral finance research, which of the following is a best practice for producing
successful participant outcomes?
A) Combining auto-enrollment with targeted education.
B) Adding a self-directed brokerage option.
C) Re-enrolling all participants into equity investments.
D) Offering group meetings that focus on participants' rational decision making. ✔Correct
Answer-A) Combining auto-enrollment with targeted education.
Company ABC and Company DEF are determined to be part of a related group of companies. All
the following are TRUE except:
A) The employees of both ABC and DEF may end up participating in one plan.
B) ABC may be required to make contributions for its employees into DEF's plan.
C) DEF has the right to "opt out" and be excluded from the related group.
D) If DEF adopts a plan, ABC employees may be eligible for the plan. ✔Correct Answer-C) DEF
has the right to "opt out" and be excluded from the related group.
Which of the following plan designs may result in better participant deferral behavior?
A) Adding an employer matching contribution equal to 25% up to 12% of compensation
deferred.
,B) Adding a 3% nonelective safe harbor contribution.
C) Adding a 1,000 hours of service requirement to receive the employer matching contribution.
D) Adding a profit-sharing contribution. ✔Correct Answer-A) Adding an employer matching
contribution equal to 25% up to 12% of compensation deferred.
An advisor is meeting with a Plan Sponsor to discuss contribution design in her plan. All of the
following questions will help with this conversation, EXCEPT:
A) Is there a goal that employees should be required to contribute to receive an employer
contribution?
B) Can participants convert their existing contribution accounts to Roth accounts?
C) Is there a group of employees who are unlikely to participate in the plan?
D) How important is it that employees are on track for adequate retirement income?
✔Correct Answer-B) Can participants convert their existing contribution accounts to Roth
accounts?
Jake is a sole proprietor and has just established a software development company. He has
recently hired two employees. Currently, the company does not have a good cash flow, but if
Jake can hire more software engineers, growth and profits should increase. Based on that
information, all of the following are questions that an advisor should ask when establishing a
plan for Jake's company, EXCEPT:
A) Can the company's current cash flow support employer contributions?
B) Does the company have an established line of credit?
C) What are Jake's objectives for attracting future employees?
D) Is Jake willing to make a fixed contribution if it enables him to save more? ✔Correct
Answer-B) Does the company have an established line of credit?
A partnership is a business that:
A) Cannot have a limited liability structure.
B) Has at least two partners.
C) Is typically run by a board of directors.
D) Reports income on form 1120. ✔Correct Answer-B) Has at least two partners.
All of the following describe the impact of a business's cash flow and budget when establishing
a plan, EXCEPT:
A) A plan advisor should inform the employer that required contributions will be waived for any
year that the company does not make a profit.
B) A plan advisor should explain a plan's contribution commitment to the employer.
C) Employers should have a stable cash flow if they are considering adopting a Defined
Benefit/Defined Contribution combination plan.
, D) A plan advisor may work with the service provider to show estimates of what employer
contributions would be under different contribution formulas. ✔Correct Answer-A) A plan
advisor should inform the employer that required contributions will be waived for any year that
the company does not make a profit.
Which of the following reports can be used in measuring plan effectiveness and participant
outcomes?
A) Number of terminated participants who elected to roll their accounts into IRAs.
B) Average deferral rate of participants in the plan.
C) Independent accountant's required annual audit of the plan.
D) Summary Annual Report. ✔Correct Answer-B) Average deferral rate of participants in the
plan.
All of the following are benefits of participant retirement readiness, EXCEPT:
A) Employers can better manage their workforce needs.
B) Participants receive a guarantee of lifetime income payments.
C) Employees may be more satisfied with their jobs when working for an employer that actively
promotes retirement readiness programs.
D) Employers can work with service providers who have tools to assist participants in increasing
retirement savings. ✔Correct Answer-B) Participants receive a guarantee of lifetime income
payments.
All of following are items to consider when developing a strategy to promote successful
participant outcomes, EXCEPT:
A) What is the average life expectancy for the participants' beneficiaries?
B) Should investment advice be offered?
C) Is senior level management interested in promoting "retirement readiness"?
D) What type of participant education should be provided? ✔Correct Answer-A) What is the
average life expectancy for the participants' beneficiaries?
All of the following statements describe the re-enrollment process of reinvesting participant
accounts in the plan's asset allocation funds, EXCEPT:
A) The re-enrollment of participant accounts is considered a behavioral finance method.
B) Participants are given the opportunity to "opt-out" of the re-enrollment of their account
balances.
C) The goal of the re-enrollment process is to improve participant outcomes by automatically
investing their account balances in asset allocation funds appropriate for their age.
D) Participant notices are not required. ✔Correct Answer-D) Participant notices are not
required.
