Page 1 of 170
Professional Plan Consultant Exam Prep:
200 Comprehensive MCQ Practice Guide &
ERISA Fiduciary Review
1. Under ERISA Section 3(21)(A), a person is considered a
fiduciary to the extent they exercise which of the following?
(Select all that apply)
A) Discretionary authority or control over plan management
B) Discretionary authority or control over plan asset
management
C) Rendering investment advice for a fee to the plan
D) Processing routine benefit claims without discretion
Answer: A, B, C
Rationale: ERISA defines fiduciary status functionally based on
discretion and control, not by title. Administrative functions
,Page 2 of 170
without discretion (e.g., processing routine claims) do not confer
fiduciary status. Individuals who render investment advice for
compensation are also fiduciaries .
2. Which of the following best describes the "prudent man"
standard of care under ERISA Section 404(a)(1)(B)?
A) A fiduciary must achieve the highest possible investment
returns annually
B) A fiduciary must act with the care, skill, prudence, and
diligence that a prudent person familiar with such matters
would use
C) A fiduciary must guarantee plan assets against any loss
D) A fiduciary must follow all participant requests
regardless of prudence
Answer: B
,Page 3 of 170
Rationale: The prudent man rule requires fiduciaries to act with
the care, skill, prudence, and diligence under the circumstances
that a prudent person acting in a like capacity would use. It does
NOT require guaranteeing returns or avoiding all risk—just
managing risk prudently .
3. The "exclusive benefit rule" under ERISA Section
404(a)(1)(A) requires that plan fiduciaries act:
A) In the best interest of the plan sponsor
B) Solely in the interest of participants and beneficiaries
C) To minimize employer contributions
D) To comply with IRS tax rules only
Answer: B
Rationale: The exclusive benefit rule mandates that plan
fiduciaries act solely in the interest of participants and
, Page 4 of 170
beneficiaries, not for the benefit of the employer or other
parties. This is a core duty of loyalty .
4. A fiduciary who engages in a prohibited transaction under
ERISA Section 406 may be subject to:
A) Only removal from the plan
B) Excise taxes under the Internal Revenue Code Section
4975
C) Automatic indemnification by the DOL
D) No penalties if the transaction benefited participants
Answer: B
Rationale: Prohibited transactions trigger IRC §4975 excise
taxes—15% initial, 100% if not corrected. Even if the
transaction benefited participants, it remains a prohibited
transaction unless an exemption applies .
Professional Plan Consultant Exam Prep:
200 Comprehensive MCQ Practice Guide &
ERISA Fiduciary Review
1. Under ERISA Section 3(21)(A), a person is considered a
fiduciary to the extent they exercise which of the following?
(Select all that apply)
A) Discretionary authority or control over plan management
B) Discretionary authority or control over plan asset
management
C) Rendering investment advice for a fee to the plan
D) Processing routine benefit claims without discretion
Answer: A, B, C
Rationale: ERISA defines fiduciary status functionally based on
discretion and control, not by title. Administrative functions
,Page 2 of 170
without discretion (e.g., processing routine claims) do not confer
fiduciary status. Individuals who render investment advice for
compensation are also fiduciaries .
2. Which of the following best describes the "prudent man"
standard of care under ERISA Section 404(a)(1)(B)?
A) A fiduciary must achieve the highest possible investment
returns annually
B) A fiduciary must act with the care, skill, prudence, and
diligence that a prudent person familiar with such matters
would use
C) A fiduciary must guarantee plan assets against any loss
D) A fiduciary must follow all participant requests
regardless of prudence
Answer: B
,Page 3 of 170
Rationale: The prudent man rule requires fiduciaries to act with
the care, skill, prudence, and diligence under the circumstances
that a prudent person acting in a like capacity would use. It does
NOT require guaranteeing returns or avoiding all risk—just
managing risk prudently .
3. The "exclusive benefit rule" under ERISA Section
404(a)(1)(A) requires that plan fiduciaries act:
A) In the best interest of the plan sponsor
B) Solely in the interest of participants and beneficiaries
C) To minimize employer contributions
D) To comply with IRS tax rules only
Answer: B
Rationale: The exclusive benefit rule mandates that plan
fiduciaries act solely in the interest of participants and
, Page 4 of 170
beneficiaries, not for the benefit of the employer or other
parties. This is a core duty of loyalty .
4. A fiduciary who engages in a prohibited transaction under
ERISA Section 406 may be subject to:
A) Only removal from the plan
B) Excise taxes under the Internal Revenue Code Section
4975
C) Automatic indemnification by the DOL
D) No penalties if the transaction benefited participants
Answer: B
Rationale: Prohibited transactions trigger IRC §4975 excise
taxes—15% initial, 100% if not corrected. Even if the
transaction benefited participants, it remains a prohibited
transaction unless an exemption applies .
