CPFA EXAM QUESTIONS AND ANSWERS
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."
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.
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
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."
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.
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
