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NAPA CPFA Certification Exam V 2
2026 /2027 | Certified Plan Fiduciary
Advisor | Verified Questions &
Answers | Grade A
ERISA requires that fiduciaries manage the plan for the exclusive benefit of which of the following parties? a. Participants and their beneficiaries b. Plan Sponsor c. Plan Administrator d. Business owner a. Participants and their beneficiaries June is a Plan Sponsor of a small plan and decided she'll be acting as the sole fiduciary of the plan. All of the following are her responsibilities, EXCEPT: a. Give investment advice to participants b. Fill the role of Plan Administrator c. Follow a prudent process when hiring service providers
d. Sign and file the Form 5500 a. Give investment advice to participants Under ERISA, the Plan Administrator has the following roles, EXCEPT: a. Providing participants with a summary plan description b. Redesigning the plan's employer matching contribution formula c. Distributing required notices to participants d. Providing the plan document to participants who request a copy b. Redesigning the plan's employer matching contribution formula Under ERISA, all of the following are Plan Trustee responsibilities, EXCEPT: a. Monitor the investment manager whom the Plan Trustee hired. b. Oversee the Plan Administrator. c. Delegate specific investment duties to a service provider and monitor the service provider's performance. d. Follow participant directions for the investment of contributions, unless the
Sharon is a 3(21) advisor. She is meeting with a potential client and is preparing for her meeting. All of the following are services that Sharon may offer the prospect, EXCEPT: a. Attend the client's investment committee meetings. b. Create the agendas for the client's investment committee meetings. c. Assist with the review of the investments. d. Make decision to replace funds on the watch list pursuant to the investment policy statement, prior to attending the investment committee meeting. d. Make decision to replace funds on the watch list pursuant to the investment policy statement, prior to attending the investment committee meeting. All of the following represent potential breaches of fiduciary responsibility by plan fiduciaries, EXCEPT: a. A Plan Trustee delegates some of his responsibilities to a discretionary trustee who he continues to monitor. b. A Plan Sponsor chooses a bank's recordkeeping service without performing due diligence because the bank provides reduced rates on corporate banking services. c. A Plan Trustee deposits weekly payroll deferrals at the end of the quarter.
d. A Plan Sponsor appoints a consultant to monitor the plan's service provider but then ignores the consultant's findings. a. A Plan Trustee delegates some of his responsibilities to a discretionary trustee who he continues to monitor. All of the following statements represent the DOL's role in overseeing plans, EXCEPT: a. Upon investigation the DOL may request information to identify whether a prohibited transaction has occurred. b. The DOL has provided correction methods for specific prohibited transactions. c. The DOL and IRS work together to coordinate enforcement on prohibited transaction issues. d. A DOL investigation letter will usually ask for no more than five items related to the plan's operation. d. A DOL investigation letter will usually ask for no more than five items related to the plan's operation. Which statement regarding the IRS and DOL correction programs is TRUE? a. The IRS and DOL correction programs cover identical plan errors. b. The Voluntary Fiduciary Correction Program can be used only when an error is found during a DOL investigation.
a. Establishes a 401(k) plan for his company. b. Determines the plan's employer matching contribution formula. c. Hires the plan's investment advisor. d. Decides to terminate the 401(k) plan. c. Hires the plan's investment advisor. All of the following documents should be maintained to show fiduciary best practices, EXCEPT: a. Current fee benchmarking report for administration services b. Documentation of selection process for new payroll vendor c. Copies of retirement plan committee meeting minutes d. Copies of retirement plan committee agendas b. Documentation of selection process for new payroll vendor All of the following documents are updated annually, EXCEPT: a. 404(a)(5) participant fee disclosure b. Plan document
c. Qualified default investment alternative notice d. Safe Harbor Matching 401(k) notices b. Plan document All of the following are consequences of fiduciary breaches, EXCEPT: a. A fiduciary should make good on any losses caused by his or her fiduciary breach. b. A fiduciary should restore any profits to the plan that had resulted due to his or her fiduciary breach. c. The corporate veil protects fiduciaries from personal liability. d. A fiduciary who has committed a breach may be removed and prohibited against serving as a fiduciary in the future. c. The corporate veil protects fiduciaries from personal liability. All of the following are best practices for determining the reasonableness of plan fees, EXCEPT: a. Determine whether each individual expense is reasonable. b. Research revenue sharing arrangements to determine the underlying cost of services. c. Determine whether any expenses paid to fiduciaries have violated the conflict of interest rules.
b. XYZ Inc., who is seeking to acquire STU, Inc. ERISA defines the following as plan fiduciaries, EXCEPT: a. Plan Sponsor b. Plan Accountant c. Plan Trustee d. Plan Administrator b. Plan Accountant All of the following describe non-fiduciary individuals performing ministerial functions, EXCEPT: a. A benefits administrator prepares the summary plan description. b. A human resources director decides to fully vest a terminated employee because of his excellent work history c. An ERISA attorney updates a client's plan document to comply with current law. d. A payroll manager prepares the weekly deferral deposit and forwards it to the plan provider. b. A human resources director decides to fully vest a terminated employee because of his excellent work history
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 withdrawal. d. A plan advisor is responsible for drafting annual safe harbor notices. a. A TPA performs annual compliance testing. All of the following are important factors when selecting a service provider, EXCEPT: a. Service provider's financial stability b. Experience with plans of similar size and complexity c. Willingness to provide revenue sharing to offset plan fees d. Qualifications of personnel that will service plan c. Willingness to provide revenue sharing to offset plan fees Which statement regarding bundled service arrangements is TRUE?
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. 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 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? 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 the information above, 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? b. Does the company have an established line of credit?
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 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. b. Participants receive a guarantee of lifetime income payments.
All of the 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? 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. d. Participant notices are not required.
An owner-driven plan sponsor wants to retire in five to ten years. His company has a stable cash flow and ten employees. All of the following plan designs are compatible with the owner's goals, EXCEPT: a. 401(k) cross-tested safe harbor plan b. Defined benefit/defined contribution combination plan c. 401(k) safe harbor plan d. SIMPLE IRA d. SIMPLE IRA A 401(k) plan has poor participation among the rank-and-file employees. As a plan advisor, all of the following recommendations could boost plan participation, EXCEPT: a. Increasing the match amount from 25% to 50% of deferrals b. Allowing participant loans c. Adding a profit-sharing contribution based on years of service d. Add and auto-enrollment feature to the plan c. Adding a profit-sharing contribution based on years of service An owner-driven plan sponsor wants to know the advantages of a safe harbor 401(k) plan.
All of the following are advantages EXCEPT: a. Safe harbor contributions can exempt the plan from the ADP test. b. Safe harbor contributions may be taken as a hardship withdrawal. c. Safe harbor contributions are discretionary. d. Safe harbor contributions can satisfy top-heavy minimum contribution requirements. c. Safe harbor contributions are discretionary. All of the following plan features are typically located in the plan's adoption agreement, EXCEPT: a. Availability of participant loans b. Availability of in-service withdrawals c. Matching contribution formula d. Definition of ERISA fiduciary roles and responsibilities d. Definition of ERISA fiduciary roles and responsibilities All of the following are advantages of the request for proposal (RFP) process in a participant- driven plan, EXCEPT:
