[kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
Question 1. **Which regulatory body issued the PTE 2020‑02 that defines the “Impartial
Conduct Standards” for rollover advisors?**
A) Securities and Exchange Commission (SEC)
B) Department of Labor (DOL)
C) Internal Revenue Service (IRS)
D) Financial Industry Regulatory Authority (FINRA)
Answer: B
Explanation: The Department of Labor issued PTE 2020‑02, establishing best‑interest,
reasonable‑compensation, and anti‑misleading‑statement requirements for rollover advice.
Question 2. **Under the current DOL interpretation, which of the following triggers fiduciary
status for a rollover advisor?**
A) Providing only educational materials
B) Receiving a fixed salary unrelated to transactions
C) Earning commissions on a rollover conversion
D) Conducting a one‑time fee‑only review of a client’s plan
Answer: C
Explanation: Receiving commissions on a rollover creates a conflict of interest, thereby imposing
fiduciary duties under the DOL’s new rules.
Question 3. **What is the primary distinction between fiduciary duties under ERISA Title I and
Title II of the Internal Revenue Code?**
A) Title I governs tax reporting; Title II governs plan administration
B) Title I imposes fiduciary duties; Title II imposes tax‑related duties only
C) Title I applies to IRAs; Title II applies to 401(k)s
D) Title I deals with employee benefits; Title II deals with employer contributions
,[kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
Answer: B
Explanation: ERISA Title I imposes fiduciary standards, while Title II of the IRC focuses on tax
qualifications and does not create fiduciary duties.
Question 4. **Which of the following is considered a “Prohibited Transaction” under ERISA?**
A) Direct rollover from a 401(k) to an IRA
B) Paying a commission to an advisor for recommending a rollover to a specific product
C) Providing a fee‑only investment analysis report
D) Transferring assets between two qualified plans without cashing out
Answer: B
Explanation: Receiving a commission tied to a specific rollover creates a prohibited transaction
because it creates a conflict of interest.
Question 5. **In a plan‑to‑plan rollover, what is the main benefit to the participant?**
A) Ability to take a distribution without taxes
B) Consolidation of assets into a single qualified plan with continued ERISA protection
C) Immediate access to employer stock at cost basis
D) Automatic conversion to a Roth IRA
Answer: B
Explanation: Plan‑to‑plan rollovers keep assets within qualified plans, preserving ERISA fiduciary
protections and simplifying management.
Question 6. **Which of the following best describes an indirect 60‑day rollover?**
A) Trustee‑to‑trustee transfer with no participant involvement
B) Distribution to the participant who must redeposit within 60 days to avoid taxation
C) Direct movement of assets from one IRA to another without cashing out
,[kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
D) Transfer of assets from a 401(k) to a Roth IRA with tax withholding
Answer: B
Explanation: An indirect rollover involves the participant receiving a distribution and
redepositing the full amount (including withheld taxes) within 60 days.
Question 7. **When comparing investment options between a 401(k) and an IRA, which factor
most often gives the IRA an advantage?**
A) Lower administrative fees
B) Access to institutional‑priced mutual funds
C) Ability to invest in a broader array of individual securities and alternative assets
D) Employer matching contributions
Answer: C
Explanation: IRAs typically allow a wider selection of individual stocks, bonds, ETFs, and
alternatives not available in many 401(k) menus.
Question 8. **Which of the following statements about creditor protection is correct?**
A) Both 401(k) plans and IRAs receive identical federal protection from creditors.
B) ERISA‑governed 401(k) plans have federal creditor protection, while IRAs are subject to state
law.
C) IRAs have stronger federal protection than 401(k) plans.
D) Neither 401(k) plans nor IRAs have any creditor protection.
Answer: B
Explanation: ERISA plans enjoy federal protection from creditors, whereas IRAs are protected
only to the extent state law provides.
Question 9. **What must be documented to satisfy the DOL’s “Comparative Analysis”
requirement?**
, [kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
A) Only the client’s preferred investment option.
B) A side‑by‑side comparison of fees, investment options, and services between the current
plan and the proposed rollover.
C) The advisor’s commission schedule.
D) The client’s tax return for the prior year.
Answer: B
Explanation: The DOL requires a documented comparison of fees, investment options, and plan
services to demonstrate the recommendation is in the client’s best interest.
Question 10. **Which disclosure is required in the written “Rollover Recommendation
Statement”?**
A) The advisor’s personal investment philosophy.
B) The exact amount of commission the advisor will receive.
C) The reasons why the rollover is in the client’s best interest, including fee and investment
comparisons.
D) A list of all competitors’ products.
Answer: C
Explanation: The statement must clearly explain why the rollover benefits the client, focusing on
fee, investment, and service comparisons.
Question 11. **If a client refuses to provide their 401(k) plan documents, which source may an
advisor use to perform a reasonable comparison?**
A) The advisor’s own estimate of fees.
B) Benchmarks derived from the plan’s Form 5500 filing.
C) The client’s credit report.
D) Publicly available stock market data.
Answer: B
Preparation Guide
Question 1. **Which regulatory body issued the PTE 2020‑02 that defines the “Impartial
Conduct Standards” for rollover advisors?**
A) Securities and Exchange Commission (SEC)
B) Department of Labor (DOL)
C) Internal Revenue Service (IRS)
D) Financial Industry Regulatory Authority (FINRA)
Answer: B
Explanation: The Department of Labor issued PTE 2020‑02, establishing best‑interest,
reasonable‑compensation, and anti‑misleading‑statement requirements for rollover advice.
Question 2. **Under the current DOL interpretation, which of the following triggers fiduciary
status for a rollover advisor?**
A) Providing only educational materials
B) Receiving a fixed salary unrelated to transactions
C) Earning commissions on a rollover conversion
D) Conducting a one‑time fee‑only review of a client’s plan
Answer: C
Explanation: Receiving commissions on a rollover creates a conflict of interest, thereby imposing
fiduciary duties under the DOL’s new rules.
Question 3. **What is the primary distinction between fiduciary duties under ERISA Title I and
Title II of the Internal Revenue Code?**
A) Title I governs tax reporting; Title II governs plan administration
B) Title I imposes fiduciary duties; Title II imposes tax‑related duties only
C) Title I applies to IRAs; Title II applies to 401(k)s
D) Title I deals with employee benefits; Title II deals with employer contributions
,[kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
Answer: B
Explanation: ERISA Title I imposes fiduciary standards, while Title II of the IRC focuses on tax
qualifications and does not create fiduciary duties.
Question 4. **Which of the following is considered a “Prohibited Transaction” under ERISA?**
A) Direct rollover from a 401(k) to an IRA
B) Paying a commission to an advisor for recommending a rollover to a specific product
C) Providing a fee‑only investment analysis report
D) Transferring assets between two qualified plans without cashing out
Answer: B
Explanation: Receiving a commission tied to a specific rollover creates a prohibited transaction
because it creates a conflict of interest.
Question 5. **In a plan‑to‑plan rollover, what is the main benefit to the participant?**
A) Ability to take a distribution without taxes
B) Consolidation of assets into a single qualified plan with continued ERISA protection
C) Immediate access to employer stock at cost basis
D) Automatic conversion to a Roth IRA
Answer: B
Explanation: Plan‑to‑plan rollovers keep assets within qualified plans, preserving ERISA fiduciary
protections and simplifying management.
Question 6. **Which of the following best describes an indirect 60‑day rollover?**
A) Trustee‑to‑trustee transfer with no participant involvement
B) Distribution to the participant who must redeposit within 60 days to avoid taxation
C) Direct movement of assets from one IRA to another without cashing out
,[kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
D) Transfer of assets from a 401(k) to a Roth IRA with tax withholding
Answer: B
Explanation: An indirect rollover involves the participant receiving a distribution and
redepositing the full amount (including withheld taxes) within 60 days.
Question 7. **When comparing investment options between a 401(k) and an IRA, which factor
most often gives the IRA an advantage?**
A) Lower administrative fees
B) Access to institutional‑priced mutual funds
C) Ability to invest in a broader array of individual securities and alternative assets
D) Employer matching contributions
Answer: C
Explanation: IRAs typically allow a wider selection of individual stocks, bonds, ETFs, and
alternatives not available in many 401(k) menus.
Question 8. **Which of the following statements about creditor protection is correct?**
A) Both 401(k) plans and IRAs receive identical federal protection from creditors.
B) ERISA‑governed 401(k) plans have federal creditor protection, while IRAs are subject to state
law.
C) IRAs have stronger federal protection than 401(k) plans.
D) Neither 401(k) plans nor IRAs have any creditor protection.
Answer: B
Explanation: ERISA plans enjoy federal protection from creditors, whereas IRAs are protected
only to the extent state law provides.
Question 9. **What must be documented to satisfy the DOL’s “Comparative Analysis”
requirement?**
, [kRS] 401k Rollover Specialist Certification Exam
Preparation Guide
A) Only the client’s preferred investment option.
B) A side‑by‑side comparison of fees, investment options, and services between the current
plan and the proposed rollover.
C) The advisor’s commission schedule.
D) The client’s tax return for the prior year.
Answer: B
Explanation: The DOL requires a documented comparison of fees, investment options, and plan
services to demonstrate the recommendation is in the client’s best interest.
Question 10. **Which disclosure is required in the written “Rollover Recommendation
Statement”?**
A) The advisor’s personal investment philosophy.
B) The exact amount of commission the advisor will receive.
C) The reasons why the rollover is in the client’s best interest, including fee and investment
comparisons.
D) A list of all competitors’ products.
Answer: C
Explanation: The statement must clearly explain why the rollover benefits the client, focusing on
fee, investment, and service comparisons.
Question 11. **If a client refuses to provide their 401(k) plan documents, which source may an
advisor use to perform a reasonable comparison?**
A) The advisor’s own estimate of fees.
B) Benchmarks derived from the plan’s Form 5500 filing.
C) The client’s credit report.
D) Publicly available stock market data.
Answer: B
