CBP Retirement and Pension Plans 2

Question 1

Under ERISA, what is the fiduciary standard required of plan administrators?

Accepted Answer

Prudent expert standard acting solely in participant interests

Answer

ERISA fiduciaries must act with the care, skill, prudence, and diligence of a prudent expert and must act solely in the interest of plan participants and beneficiaries.

Question 2

Which type of retirement plan is most commonly associated with public school teachers and non-profit organization employees?

Accepted Answer

403(b)

Answer

403(b) plans are tax-sheltered annuity plans available to employees of public schools, tax-exempt organizations, and certain ministers.

Question 3

What is a Required Minimum Distribution (RMD) in the context of retirement plans?

Accepted Answer

The mandatory annual withdrawal from tax-deferred retirement accounts starting at age 73

Answer

RMDs are the minimum amounts the IRS requires account holders to withdraw annually from tax-deferred retirement accounts beginning at age 73 under the SECURE 2.0 Act.

Question 4

In a cash balance plan, what represents the employee's accrued benefit?

Accepted Answer

Hypothetical account balance with pay credits and interest credits

Answer

Cash balance plans are defined benefit plans that express the promised benefit as a hypothetical account balance, with annual pay credits and guaranteed interest credits applied.

Question 5

Which non-discrimination test ensures that 401(k) employee deferral contributions do not disproportionately favor highly compensated employees?

Accepted Answer

ADP test

Answer

The Actual Deferral Percentage (ADP) test compares the average deferral rates of highly compensated employees to those of non-highly compensated employees to ensure equity.

CBP - Certified Benefit Professional Practice Test

CBP - Certified Benefit Professional Practice Test

CBP Retirement and Pension Plans 2