CPFA PRACTICE EXAM QUESTIONS AND
DETAILED SOLUTIONS 2026
▶ 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.. Answer: 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.. Answer: 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.. Answer: 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.
c. The DOL website includes an online calculator that calculates earnings
amounts to be paid to the plan.
d. The Employee Plans Compliance Resolution System is used to correct
prohibited transaction violations.. Answer: c. The DOL website includes an
online calculator that calculates earnings amounts to be paid to the plan.
▶ All of the following statements describe characteristics of ERISA fidelity
bonds and fiduciary insurance, EXCEPT:
a. Fiduciary insurance may protect plan fiduciaries from losses resulting
from errors.
,b. ERISA fidelity bond protects the employee from any error made when
submitting contributions to a service provider.
c. Plan assets may be used to purchase a fidelity bond.
d. An ERISA fidelity bond may be set-up as a blanket bond that covers all
officers, directors, and employees of a plan sponsor.. Answer: b. ERISA
fidelity bond protects the employee from any error made when submitting
contributions to a service provider.
(Insurance protects fiduciaries, bond is required and protects assets from
theft and fraud)
▶ Larry is the owner of DEF Company. Which of Larry's activities is
considered a fiduciary function?
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.. Answer: 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. Answer: 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. Answer: 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.. Answer: 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.
d. Owner-driven plans are not required to determine the reasonableness of
plan fees due to their limited personnel and financial resources.. Answer:
d. Owner-driven plans are not required to determine the reasonableness of
plan fees due to their limited personnel and financial resources.
▶ All of the following fees may be paid from the plan, EXCEPT:
a. TPA fee for Form 5500 preparation
DETAILED SOLUTIONS 2026
▶ 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.. Answer: 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.. Answer: 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.. Answer: 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.
c. The DOL website includes an online calculator that calculates earnings
amounts to be paid to the plan.
d. The Employee Plans Compliance Resolution System is used to correct
prohibited transaction violations.. Answer: c. The DOL website includes an
online calculator that calculates earnings amounts to be paid to the plan.
▶ All of the following statements describe characteristics of ERISA fidelity
bonds and fiduciary insurance, EXCEPT:
a. Fiduciary insurance may protect plan fiduciaries from losses resulting
from errors.
,b. ERISA fidelity bond protects the employee from any error made when
submitting contributions to a service provider.
c. Plan assets may be used to purchase a fidelity bond.
d. An ERISA fidelity bond may be set-up as a blanket bond that covers all
officers, directors, and employees of a plan sponsor.. Answer: b. ERISA
fidelity bond protects the employee from any error made when submitting
contributions to a service provider.
(Insurance protects fiduciaries, bond is required and protects assets from
theft and fraud)
▶ Larry is the owner of DEF Company. Which of Larry's activities is
considered a fiduciary function?
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.. Answer: 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. Answer: 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. Answer: 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.. Answer: 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.
d. Owner-driven plans are not required to determine the reasonableness of
plan fees due to their limited personnel and financial resources.. Answer:
d. Owner-driven plans are not required to determine the reasonableness of
plan fees due to their limited personnel and financial resources.
▶ All of the following fees may be paid from the plan, EXCEPT:
a. TPA fee for Form 5500 preparation
