CEBS - RPA 2 Exam Questions and 100% correct answers
|Graded A+ (2026/2027)
Investment policy statement for qualified retirement plans for participant directed includes: -
Answer -Number of options permitted, the range of investment options allowed and default
investment options.
Investment policy statement for qualified retirement plans for NOT participant directed
includes: - Answer -Targeted asset allocation and frequency of rebalancing.
DB hybrid plan disadvantages: - Answer -May erode sponsor's fundamental objective of
providing retirement benefits and younger participant's not perceiving sufficient value quickly
enough.
Proposed asset valuation for DB plan, statutory requirements %: - Answer -Valuation b/w 90-
110% of FMV
Pension equity plans are based on what? - Answer -Final average pay and % credits that worker
receives each year he/she is plan participant
Reasons for deferring current income through deferred comp agreement: - Answer -Extending
exec.'s income beyond normal working years into retirement; spreading bonuses over wider
span of years; tying exec. to ER by stipulating conditions for receipt of deferred amounts.
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,Minimum funding, as required by PPA: - Answer -Present value of benefits expected to accrue
during plan year; increases in past service benefits b/c of expected increases in comp during
year; and current value of plan assets.
New comparability plans allocated group selection: - Answer -Plan sponsors have wide latitude
in criteria used to establish allocation group..
Funds that represent the ultimate form of passive investing: - Answer -Index funds
Equity index fund - Answer -Replicates a particular index such as S&P 500 and designed to
generate a beta of 1.0 (rate of return on fund is expected to be equal to that of S&P 500); Based
on the efficient market hypothesis (EMH), which states that securities markets are efficient in
processing of information (i.e., based on correct evaluation of all info available at time).
Target Benefit Plans - Answer -DC plans; not guaranteed; individual participant account values
reflect actual gains and losses from investments.
Two key events addressing implication of conversion from traditional DB plan to hybrid plans: -
Answer -(1) Cash balance plans generally are and always have been legal and (2) that DB plans
are not age discriminatory if participant's accrued benefit is at least equal to the accrued benefit
of any similarly situated, younger individual.
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, Disadvantage of solo 401(k) plan - Answer -Plan is required to comply w/ most of the admin
requirements of non-solo 401(k) plans.
Solo 401(k) plan - Answer -401(k) offered to a one-person firm or a two-person firm, usually
composed of owner and spouse, that must comply w/ 401(k) admin requirements except for
5500 filing--provided that assets are $250,000 or less.
EGTRRA change to solo 401(k) - Answer -Elective deferral limits were increased
Keogh contribution formula: - Answer -Keogh contribution rate X (net income minus EE
contributions minus 1/2 self-employment taxes) divided by (1 + Keogh contribution rate)
Keogh plan - Answer -Qualified retirement plan for self-employed persons and their EEs to
which yearly tax-deductible contributions up to specified limit can be made. Also known as HR-
10 plans and include DB and DC plans.
Keogh plan loan availability: - Answer -Permitted on same basis as for qualified retirement plans
Passive investment techniques - Answer -Dedication, immunization and contingent
immunization. Attempt to construct a bond portfolio such that its cash flow can be used to fund
specific plan liabilities.
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|Graded A+ (2026/2027)
Investment policy statement for qualified retirement plans for participant directed includes: -
Answer -Number of options permitted, the range of investment options allowed and default
investment options.
Investment policy statement for qualified retirement plans for NOT participant directed
includes: - Answer -Targeted asset allocation and frequency of rebalancing.
DB hybrid plan disadvantages: - Answer -May erode sponsor's fundamental objective of
providing retirement benefits and younger participant's not perceiving sufficient value quickly
enough.
Proposed asset valuation for DB plan, statutory requirements %: - Answer -Valuation b/w 90-
110% of FMV
Pension equity plans are based on what? - Answer -Final average pay and % credits that worker
receives each year he/she is plan participant
Reasons for deferring current income through deferred comp agreement: - Answer -Extending
exec.'s income beyond normal working years into retirement; spreading bonuses over wider
span of years; tying exec. to ER by stipulating conditions for receipt of deferred amounts.
1|Page
,Minimum funding, as required by PPA: - Answer -Present value of benefits expected to accrue
during plan year; increases in past service benefits b/c of expected increases in comp during
year; and current value of plan assets.
New comparability plans allocated group selection: - Answer -Plan sponsors have wide latitude
in criteria used to establish allocation group..
Funds that represent the ultimate form of passive investing: - Answer -Index funds
Equity index fund - Answer -Replicates a particular index such as S&P 500 and designed to
generate a beta of 1.0 (rate of return on fund is expected to be equal to that of S&P 500); Based
on the efficient market hypothesis (EMH), which states that securities markets are efficient in
processing of information (i.e., based on correct evaluation of all info available at time).
Target Benefit Plans - Answer -DC plans; not guaranteed; individual participant account values
reflect actual gains and losses from investments.
Two key events addressing implication of conversion from traditional DB plan to hybrid plans: -
Answer -(1) Cash balance plans generally are and always have been legal and (2) that DB plans
are not age discriminatory if participant's accrued benefit is at least equal to the accrued benefit
of any similarly situated, younger individual.
2|Page
, Disadvantage of solo 401(k) plan - Answer -Plan is required to comply w/ most of the admin
requirements of non-solo 401(k) plans.
Solo 401(k) plan - Answer -401(k) offered to a one-person firm or a two-person firm, usually
composed of owner and spouse, that must comply w/ 401(k) admin requirements except for
5500 filing--provided that assets are $250,000 or less.
EGTRRA change to solo 401(k) - Answer -Elective deferral limits were increased
Keogh contribution formula: - Answer -Keogh contribution rate X (net income minus EE
contributions minus 1/2 self-employment taxes) divided by (1 + Keogh contribution rate)
Keogh plan - Answer -Qualified retirement plan for self-employed persons and their EEs to
which yearly tax-deductible contributions up to specified limit can be made. Also known as HR-
10 plans and include DB and DC plans.
Keogh plan loan availability: - Answer -Permitted on same basis as for qualified retirement plans
Passive investment techniques - Answer -Dedication, immunization and contingent
immunization. Attempt to construct a bond portfolio such that its cash flow can be used to fund
specific plan liabilities.
3|Page
