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CPFA ACTUAL EXAM QUESTIONS WITH CORRECT ANSWERS COMPLETE GUIDE RATED AND GRADED A.
- CPFA ACTUAL EXAM
- A) A TPA performs annual compliance testing.
- 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.
- A) Provides efficient contribution and distribution processes.
- 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.
- A) Combining auto-enrollment with targeted education.
- 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.
- C) DEF has the right to "opt out" and be excluded from the related group.
- 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.
- A) Adding an employer matching contribution equal to 25% up to 12% of
- compensation deferred.
- 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.
- B) Can participants convert their existing contribution accounts to Roth
- accounts?
- 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) Does the company have an established line of credit?
- 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?
- B) Has at least two partners.
- 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.
- 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.
- 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.
- B) Average deferral rate of participants in the plan.
- 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.
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