NAPA CPFA CERTIFICATION PRACTICE EXAM
2026–2027 | (70 QUESTIONS AND CORRECT
ANSWERS)
Business Systems | Key Domains: ERISA Regulations, Fiduciary Duties, Retirement Plan Administration,
Investment Monitoring, Participant Education and Advice Considerations, Compliance, and Plan
Governance | Expert-Aligned Structure | Exam-Ready Practice Format
Introduction
This original NAPA CPFA-style practice exam for 2026–2027 is designed for study and preparation. It is
not represented as an actual, leaked, or verified live certification exam. It emphasizes fiduciary
responsibility, ERISA compliance, retirement plan oversight, and business systems relevant to
professional plan advisory practice.
Answer Format
All correct answers appear in bold cyan, accompanied by concise rationales explaining business and
regulatory reasoning and why alternative options are less appropriate.
File Format Requirement
The final output has been generated and provided as a downloadable .docx file.
ERISA Regulations
1. ERISA primarily governs which type of arrangement?
A. Private-sector employee benefit plans
B. All personal brokerage accounts
C. Municipal bond offerings
D. State income tax returns
Correct Answer: A. Private-sector employee benefit plans
Rationale: ERISA mainly governs private-sector employee benefit plans, including many retirement
and welfare plans.
2. Which document generally outlines the official terms under which a retirement plan is
operated?
A. Participant newsletter
B. Formal plan document
, C. Quarterly market commentary
D. Investment fact sheet only
Correct Answer: B. Formal plan document
Rationale: The plan document is the controlling legal document that sets out how the plan operates.
3. A plan fiduciary generally must act solely in the interest of
A. The recordkeeper
B. The plan sponsor's owners
C. Plan participants and beneficiaries
D. The advisor's compensation model
Correct Answer: C. Plan participants and beneficiaries
Rationale: ERISA's duty of loyalty requires fiduciaries to act solely in the interest of participants and
beneficiaries.
4. Which filing is commonly associated with annual reporting for many ERISA-covered retirement
plans?
A. Form W-2
B. Schedule K-1
C. Form 1040
D. Form 5500
Correct Answer: D. Form 5500
Rationale: Many ERISA plans must complete annual reporting through Form 5500 and related
schedules, when applicable.
5. ERISA's prudence standard is generally judged based on
A. The fiduciary process used at the time decisions were made
B. Whether every investment always outperformed
C. The sponsor's brand recognition
D. The age of the oldest participant
Correct Answer: A. The fiduciary process used at the time decisions were made
Rationale: Prudence is typically evaluated by the quality of the decision-making process rather than
outcomes alone.
, 6. Which of the following is most closely associated with prohibited transaction concerns?
A. Printing participant statements
B. Self-dealing involving plan assets
C. Providing diversified menus
D. Benchmarking service fees
Correct Answer: B. Self-dealing involving plan assets
Rationale: Transactions involving conflicts such as self-dealing may create prohibited transaction
issues under ERISA and the Code.
7. A summary plan description is primarily intended to
A. Replace the plan document legally
B. Set market return expectations
C. Explain key plan features to participants in understandable language
D. Determine the plan's investment lineup automatically
Correct Answer: C. Explain key plan features to participants in understandable language
Rationale: The SPD is designed to communicate important plan terms and participant rights in a
clearer format.
8. Which bond requirement is commonly associated with persons who handle plan funds?
A. Auto bond
B. Treasury inflation bond
C. Shareholder bond
D. ERISA fidelity bond
Correct Answer: D. ERISA fidelity bond
Rationale: ERISA generally requires bonding for persons who handle plan funds to protect against
loss from fraud or dishonesty.
9. Who typically has authority to amend a retirement plan document?
A. The party authorized under the plan and governing corporate procedures
B. Any participant committee member
C. Any payroll vendor
D. Only the custodian
2026–2027 | (70 QUESTIONS AND CORRECT
ANSWERS)
Business Systems | Key Domains: ERISA Regulations, Fiduciary Duties, Retirement Plan Administration,
Investment Monitoring, Participant Education and Advice Considerations, Compliance, and Plan
Governance | Expert-Aligned Structure | Exam-Ready Practice Format
Introduction
This original NAPA CPFA-style practice exam for 2026–2027 is designed for study and preparation. It is
not represented as an actual, leaked, or verified live certification exam. It emphasizes fiduciary
responsibility, ERISA compliance, retirement plan oversight, and business systems relevant to
professional plan advisory practice.
Answer Format
All correct answers appear in bold cyan, accompanied by concise rationales explaining business and
regulatory reasoning and why alternative options are less appropriate.
File Format Requirement
The final output has been generated and provided as a downloadable .docx file.
ERISA Regulations
1. ERISA primarily governs which type of arrangement?
A. Private-sector employee benefit plans
B. All personal brokerage accounts
C. Municipal bond offerings
D. State income tax returns
Correct Answer: A. Private-sector employee benefit plans
Rationale: ERISA mainly governs private-sector employee benefit plans, including many retirement
and welfare plans.
2. Which document generally outlines the official terms under which a retirement plan is
operated?
A. Participant newsletter
B. Formal plan document
, C. Quarterly market commentary
D. Investment fact sheet only
Correct Answer: B. Formal plan document
Rationale: The plan document is the controlling legal document that sets out how the plan operates.
3. A plan fiduciary generally must act solely in the interest of
A. The recordkeeper
B. The plan sponsor's owners
C. Plan participants and beneficiaries
D. The advisor's compensation model
Correct Answer: C. Plan participants and beneficiaries
Rationale: ERISA's duty of loyalty requires fiduciaries to act solely in the interest of participants and
beneficiaries.
4. Which filing is commonly associated with annual reporting for many ERISA-covered retirement
plans?
A. Form W-2
B. Schedule K-1
C. Form 1040
D. Form 5500
Correct Answer: D. Form 5500
Rationale: Many ERISA plans must complete annual reporting through Form 5500 and related
schedules, when applicable.
5. ERISA's prudence standard is generally judged based on
A. The fiduciary process used at the time decisions were made
B. Whether every investment always outperformed
C. The sponsor's brand recognition
D. The age of the oldest participant
Correct Answer: A. The fiduciary process used at the time decisions were made
Rationale: Prudence is typically evaluated by the quality of the decision-making process rather than
outcomes alone.
, 6. Which of the following is most closely associated with prohibited transaction concerns?
A. Printing participant statements
B. Self-dealing involving plan assets
C. Providing diversified menus
D. Benchmarking service fees
Correct Answer: B. Self-dealing involving plan assets
Rationale: Transactions involving conflicts such as self-dealing may create prohibited transaction
issues under ERISA and the Code.
7. A summary plan description is primarily intended to
A. Replace the plan document legally
B. Set market return expectations
C. Explain key plan features to participants in understandable language
D. Determine the plan's investment lineup automatically
Correct Answer: C. Explain key plan features to participants in understandable language
Rationale: The SPD is designed to communicate important plan terms and participant rights in a
clearer format.
8. Which bond requirement is commonly associated with persons who handle plan funds?
A. Auto bond
B. Treasury inflation bond
C. Shareholder bond
D. ERISA fidelity bond
Correct Answer: D. ERISA fidelity bond
Rationale: ERISA generally requires bonding for persons who handle plan funds to protect against
loss from fraud or dishonesty.
9. Who typically has authority to amend a retirement plan document?
A. The party authorized under the plan and governing corporate procedures
B. Any participant committee member
C. Any payroll vendor
D. Only the custodian
