RPF Module 1: Lifecycle of a Plan-
Questions & Answers
Rollover Correct Ans-A method of transferring assets from one plan to another (either an IRA
or another qualified plan), allowing for continued tax-deferral.
Separation from Service Correct Ans-Termination of Employment.
Benefiting Correct Ans-Generally speaking, participants who receive or make a contribution
to the plan, or were eligible to make or receive a contribution to the plan (whether or not they
actually did) are considered benefiting for that portion of the plan.
Coverage Testing Correct Ans-Testing that compares the number of HCEs who are benefiting
under the plan to the number of NHCEs who are benefiting.
HCE (highly compensated employee) Correct Ans-An employee who, (1) during the current
or preceding year owned more than 5 percent of the employer, or (2) received compensation in
excess of the specified dollar limit for the preceding year.
NHCE (nonhighly compensated employee) Correct Ans-An employee who is not an HCE is a
nonhighly compensated employee (NHCE).
, Nondiscrimination Testing Correct Ans-Testing that compares the benefits or contributions of
HCEs and NHCEs to determine whether the plan discriminates against NHCEs.
Bundled Arrangement Correct Ans-A service provider arrangement in which the employer
hires one company to perform the responsibilities of several providers, such as those of the
advisor, recordkeeper, and TPA. Compare to "unbundled arrangement."
Custodian Correct Ans-The organization (usually a bank or trust company) that holds in
safekeeping the securities and other assets of a plan.
Fiduciary Correct Ans-Any person (individual or corporation) who exercises discretionary
authority or control over the management or disposition of plan assets.
Named Fiduciary Correct Ans-A fiduciary who is named by the plan, or by an employer or
employee organization, with authority to control and manage the operation and administration
of the plan.1
Plan Administrator Correct Ans-The fiduciary named in the plan document as responsible for
the administration and operation of the plan.2
Plan Sponsor: Correct Ans-The employer or group of employers (or in some cases other
entity such as an employee organization, association, committee, or board of trustees) that
establishes or maintains the plan.3
Questions & Answers
Rollover Correct Ans-A method of transferring assets from one plan to another (either an IRA
or another qualified plan), allowing for continued tax-deferral.
Separation from Service Correct Ans-Termination of Employment.
Benefiting Correct Ans-Generally speaking, participants who receive or make a contribution
to the plan, or were eligible to make or receive a contribution to the plan (whether or not they
actually did) are considered benefiting for that portion of the plan.
Coverage Testing Correct Ans-Testing that compares the number of HCEs who are benefiting
under the plan to the number of NHCEs who are benefiting.
HCE (highly compensated employee) Correct Ans-An employee who, (1) during the current
or preceding year owned more than 5 percent of the employer, or (2) received compensation in
excess of the specified dollar limit for the preceding year.
NHCE (nonhighly compensated employee) Correct Ans-An employee who is not an HCE is a
nonhighly compensated employee (NHCE).
, Nondiscrimination Testing Correct Ans-Testing that compares the benefits or contributions of
HCEs and NHCEs to determine whether the plan discriminates against NHCEs.
Bundled Arrangement Correct Ans-A service provider arrangement in which the employer
hires one company to perform the responsibilities of several providers, such as those of the
advisor, recordkeeper, and TPA. Compare to "unbundled arrangement."
Custodian Correct Ans-The organization (usually a bank or trust company) that holds in
safekeeping the securities and other assets of a plan.
Fiduciary Correct Ans-Any person (individual or corporation) who exercises discretionary
authority or control over the management or disposition of plan assets.
Named Fiduciary Correct Ans-A fiduciary who is named by the plan, or by an employer or
employee organization, with authority to control and manage the operation and administration
of the plan.1
Plan Administrator Correct Ans-The fiduciary named in the plan document as responsible for
the administration and operation of the plan.2
Plan Sponsor: Correct Ans-The employer or group of employers (or in some cases other
entity such as an employee organization, association, committee, or board of trustees) that
establishes or maintains the plan.3
