NAPA CPFA Certification Exam latest 200 questions and correct answers 2026
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Module 1: Fiduciary Management Under ERISA (Questions 1-50)
Question 1
Under ERISA, a person becomes a fiduciary to the extent they exercise what over
plan assets?
A) Ministerial authority or processing
B) Discretionary authority or control
C) Administrative responsibility
D) Contractual oversight
Answer: B
Rationale: Under ERISA Section 3(21)(A), fiduciary status is determined by
function, not title. A person becomes a fiduciary to the extent they exercise
discretionary authority or control over the management of the plan or disposition
of plan assets. Administrative or ministerial functions without discretion do not
confer fiduciary status .
,Question 2
The "Exclusive Benefit Rule" under ERISA requires fiduciaries to act solely in the
interest of:
A) The Plan Sponsor
B) Plan participants and beneficiaries
C) Shareholders of the company
D) The Department of Labor
Answer: B
Rationale: This is the Duty of Loyalty under ERISA Section 404(a)(1)(A). Fiduciaries
must prioritize participants and beneficiaries over the interests of the employer or
service providers. The exclusive purpose rule mandates acting for the exclusive
purpose of providing benefits to participants and beneficiaries .
Question 3
Which standard of conduct requires a fiduciary to act with the care, skill, and
diligence of a "prudent person acting in a like capacity"?
A) The Business Judgment Rule
,B) The Prudent Expert Rule
C) The Rule of 72
D) The Suitability Standard
Answer: B
Rationale: ERISA fiduciaries are held to the "prudent expert" standard under
ERISA Section 404(a)(1)(B). This is a higher standard than ordinary care,
recognizing that fiduciaries are expected to have specialized knowledge about
retirement plans .
Question 4
A 3(21) fiduciary serves primarily in which capacity under ERISA?
A) Directed trustee
B) Investment advice fiduciary
C) Plan administrator
D) Custodian of assets
Answer: B
, Rationale: ERISA Section 3(21) defines a fiduciary as anyone who renders
investment advice for a fee with respect to plan assets. A 3(21) advisor
recommends investments, but the plan fiduciary retains ultimate decision-making
authority .
Question 5
Which of the following is NOT a core fiduciary duty under ERISA?
A) Duty of loyalty
B) Duty of prudence
C) Duty to maximize short-term returns
D) Duty to diversify plan investments
Answer: C
Rationale: The core fiduciary duties under ERISA include the duty of loyalty (acting
solely in participants' interests), duty of prudence (acting with care and skill), duty
to diversify (minimizing risk of large losses), and duty to follow the plan
document. There is no duty to maximize returns at the expense of other
considerations like risk management .
Question 6
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Module 1: Fiduciary Management Under ERISA (Questions 1-50)
Question 1
Under ERISA, a person becomes a fiduciary to the extent they exercise what over
plan assets?
A) Ministerial authority or processing
B) Discretionary authority or control
C) Administrative responsibility
D) Contractual oversight
Answer: B
Rationale: Under ERISA Section 3(21)(A), fiduciary status is determined by
function, not title. A person becomes a fiduciary to the extent they exercise
discretionary authority or control over the management of the plan or disposition
of plan assets. Administrative or ministerial functions without discretion do not
confer fiduciary status .
,Question 2
The "Exclusive Benefit Rule" under ERISA requires fiduciaries to act solely in the
interest of:
A) The Plan Sponsor
B) Plan participants and beneficiaries
C) Shareholders of the company
D) The Department of Labor
Answer: B
Rationale: This is the Duty of Loyalty under ERISA Section 404(a)(1)(A). Fiduciaries
must prioritize participants and beneficiaries over the interests of the employer or
service providers. The exclusive purpose rule mandates acting for the exclusive
purpose of providing benefits to participants and beneficiaries .
Question 3
Which standard of conduct requires a fiduciary to act with the care, skill, and
diligence of a "prudent person acting in a like capacity"?
A) The Business Judgment Rule
,B) The Prudent Expert Rule
C) The Rule of 72
D) The Suitability Standard
Answer: B
Rationale: ERISA fiduciaries are held to the "prudent expert" standard under
ERISA Section 404(a)(1)(B). This is a higher standard than ordinary care,
recognizing that fiduciaries are expected to have specialized knowledge about
retirement plans .
Question 4
A 3(21) fiduciary serves primarily in which capacity under ERISA?
A) Directed trustee
B) Investment advice fiduciary
C) Plan administrator
D) Custodian of assets
Answer: B
, Rationale: ERISA Section 3(21) defines a fiduciary as anyone who renders
investment advice for a fee with respect to plan assets. A 3(21) advisor
recommends investments, but the plan fiduciary retains ultimate decision-making
authority .
Question 5
Which of the following is NOT a core fiduciary duty under ERISA?
A) Duty of loyalty
B) Duty of prudence
C) Duty to maximize short-term returns
D) Duty to diversify plan investments
Answer: C
Rationale: The core fiduciary duties under ERISA include the duty of loyalty (acting
solely in participants' interests), duty of prudence (acting with care and skill), duty
to diversify (minimizing risk of large losses), and duty to follow the plan
document. There is no duty to maximize returns at the expense of other
considerations like risk management .
Question 6
