CPFA EXAM NEWEST 2024 ACTUAL EXAM COMPLETE 200 QUESTIONS AND CORR ECT ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+ Which statement regarding service providers is TRUE? A) A TPA performs annua l 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 notice s. - ANSWER >>>>A) A TPA performs annual compliance testing. Which statement regarding bundled service arrangements is TRUE? A) Provides efficient contribution and distribution processes. B) Requires less fiduciary oversight than an unbundled service arr angement. 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. - ANSWER >>>> A) Provides efficient contribution and distribution processes. 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. - ANSWER >>>>A) Combining auto -
enrollment with targeted education. 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. - ANSWER >>>>C) DEF has the right to "opt out" and be excluded from the related group. Which of the follo wing 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 requ irement to receive the employer matching contribution. D) Adding a profit -sharing contribution. - ANSWER >>>>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 co ntribution 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? - ANSWER >>>> 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 flo w, 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? - ANSWER >>>>B ) Does the company have an established line of credit? 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. - ANSWER >>>>B) Has at least two partners. 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 c ompany 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 pla n advisor may work with the service provider to show estimates of what employer contributions would be under different contribution formulas. - ANSWER >>>>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. Which of the following reports can be used in measuring plan effectiveness and participant outcomes?
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