CEBS - RPA 2 Exam 2026|2027 Advanced Practice Questions and
Answers with Complete A+ Solutions 100% Correct!!!
SIMPLE characteristics - correct answer -May be established as IRA or 401(k); ER may make
matching contributions; ER may make nonelective contribution; may be established by ERs
w/ 100 or fewer EEs w/ $5,000 min. comp
Factors included in determining EE's cost basis for tax purposes - correct answer -
Aggregate of any amount EE contributed on after-tax basis; aggregate of prior insurance
costs EE reported as taxable income; loans from plan to participant that were treated as
taxable; certain items such as contributions made by ER after 1950 but before 1963
ER seeking to encourage early retirement could take following actions - correct answer -
Establish normal retirement age earlier than 65; provide no actuarial reduction of EE retires
after attaining some min. age; no reductin factor if early retirement occurs when EE's age
and service total some min. number; apply simple reduction factor for each month by which
early retirement precedes normal retirement
Shift to provide wealth mgmt approach - correct answer -Design features of retirement
plans now different; increased portability allow participants to play larger role in controlling
assets; movement of plan administration to external vendors; improved technology and
innovation in record-keeping
1|Page
,Statistical models in personal financial planning - correct answer -Deterministic models use
a set of "fixed" assumption; model that provides single, expected, future asset accumulation
based on inputs of beginning balance, years to retirement, return, ongoing savings, and
salary increases is a deterministic model; Monte Carlo technique is example of mixed model,
having characteristics of deterministic and stochastic models; PPA allows investment advice
by using unbiased computer model.
Variable annuities (equity pension) advantages - correct answer -EEs have some
expectations retirement income will fluctuate w/ general level of economic activity; from
ER's standpoint, cost can be predicted; may eliminate or reduce need for other pension
benefit liberalization; may be popular w/ EEs, particularly in rising market.
Reasons for converting to cash balance plan - correct answer -Sponsor may guarantee
interest rate below what expects can be generated; future costs may be reduced by
conversion; may meet more ER objectives than traditional DB plan; allows benefits to be
expressed in terms appealing to EEs, namely lump-sum distribution values instead of
annuities.
Major admin issues w/ SIMPLEs - correct answer -ERs must submit EE elective deferrals to
their financial institution no later than 30 days after...; ER matching contributions due for
2|Page
, deposit by date ER's tax return..; ER makes contributions on behalf of EEs to trustee or
issuer; participants must be notified that account balanced may be transferred to another
ind. account or annuity.
Rule 12b-1 fees assessed against mutual fund - correct answer -Commission to brokers;
advertising costs to promote fund to investors; commission to salespersons; fees of various
service providers to 401(k) plan
PPA changes made - correct answer -Mortality table and interest rate; EE distributions who
attains age 62; distributions for financial hardships; waived early w/drawal penalty tax on
certain distributions.
PBGC - correct answer -Federal agency established by ERISA; provides termination
insurance; provides protection in event of bankruptcy; missing participant program
expanded by PPA
Prohibited transactions by disqualified person - correct answer -Leasing property; funding
plan by debt securities; sale of property; furnishing goods and services
3|Page
Answers with Complete A+ Solutions 100% Correct!!!
SIMPLE characteristics - correct answer -May be established as IRA or 401(k); ER may make
matching contributions; ER may make nonelective contribution; may be established by ERs
w/ 100 or fewer EEs w/ $5,000 min. comp
Factors included in determining EE's cost basis for tax purposes - correct answer -
Aggregate of any amount EE contributed on after-tax basis; aggregate of prior insurance
costs EE reported as taxable income; loans from plan to participant that were treated as
taxable; certain items such as contributions made by ER after 1950 but before 1963
ER seeking to encourage early retirement could take following actions - correct answer -
Establish normal retirement age earlier than 65; provide no actuarial reduction of EE retires
after attaining some min. age; no reductin factor if early retirement occurs when EE's age
and service total some min. number; apply simple reduction factor for each month by which
early retirement precedes normal retirement
Shift to provide wealth mgmt approach - correct answer -Design features of retirement
plans now different; increased portability allow participants to play larger role in controlling
assets; movement of plan administration to external vendors; improved technology and
innovation in record-keeping
1|Page
,Statistical models in personal financial planning - correct answer -Deterministic models use
a set of "fixed" assumption; model that provides single, expected, future asset accumulation
based on inputs of beginning balance, years to retirement, return, ongoing savings, and
salary increases is a deterministic model; Monte Carlo technique is example of mixed model,
having characteristics of deterministic and stochastic models; PPA allows investment advice
by using unbiased computer model.
Variable annuities (equity pension) advantages - correct answer -EEs have some
expectations retirement income will fluctuate w/ general level of economic activity; from
ER's standpoint, cost can be predicted; may eliminate or reduce need for other pension
benefit liberalization; may be popular w/ EEs, particularly in rising market.
Reasons for converting to cash balance plan - correct answer -Sponsor may guarantee
interest rate below what expects can be generated; future costs may be reduced by
conversion; may meet more ER objectives than traditional DB plan; allows benefits to be
expressed in terms appealing to EEs, namely lump-sum distribution values instead of
annuities.
Major admin issues w/ SIMPLEs - correct answer -ERs must submit EE elective deferrals to
their financial institution no later than 30 days after...; ER matching contributions due for
2|Page
, deposit by date ER's tax return..; ER makes contributions on behalf of EEs to trustee or
issuer; participants must be notified that account balanced may be transferred to another
ind. account or annuity.
Rule 12b-1 fees assessed against mutual fund - correct answer -Commission to brokers;
advertising costs to promote fund to investors; commission to salespersons; fees of various
service providers to 401(k) plan
PPA changes made - correct answer -Mortality table and interest rate; EE distributions who
attains age 62; distributions for financial hardships; waived early w/drawal penalty tax on
certain distributions.
PBGC - correct answer -Federal agency established by ERISA; provides termination
insurance; provides protection in event of bankruptcy; missing participant program
expanded by PPA
Prohibited transactions by disqualified person - correct answer -Leasing property; funding
plan by debt securities; sale of property; furnishing goods and services
3|Page
