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CPC Consulting Skills & Client Advisory Flashcards

6 cards from real CPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CPC Consulting Skills & Client Advisory flashcards as text

  1. A CPC is helping a plan sponsor decide whether to outsource plan fiduciary responsibility to a 3(38) investment manager. What does a 3(38) manager provide that a 3(21) advisor does not?

    Answer: Discretionary investment authority and full fiduciary responsibility for investment decisions

    A 3(38) investment manager takes on full discretionary control and fiduciary responsibility for investment selection, relieving the plan sponsor of investment fiduciary liability; a 3(21) advisor only provides non-discretionary recommendations.

  2. A plan sponsor asks how to handle a significant late deposit of employee 401(k) deferrals. Which program should the CPC recommend for correction?

    Answer: DOL Voluntary Fiduciary Correction Program (VFCP) with the lost earnings calculator

    Late deposits are prohibited transactions under ERISA; the DOL's VFCP provides a specific correction method for late deposits, including use of the online Calculator to determine lost earnings, in exchange for a no-action letter.

  3. An employer wants to freeze a defined benefit plan while keeping it active. Which statement describes the correct approach?

    Answer: A hard freeze stops future accruals for all participants; a soft freeze closes the plan to new entrants but allows current participants to continue accruing

    A hard freeze ceases all future benefit accruals for all participants, while a soft freeze closes the plan to new entrants but allows existing participants to continue accruing benefits.

  4. A CPC is advising on the establishment of a Multiple Employer Plan (MEP). Which statement is correct regarding open MEPs under SECURE Act?

    Answer: Open MEPs allow unrelated employers to join a single plan managed by a Pooled Plan Provider (PPP)

    The SECURE Act created Pooled Employer Plans (PEPs), allowing unrelated employers to participate in a single plan managed by a Pooled Plan Provider registered with the DOL and IRS.

  5. A plan sponsor is considering a 'stretch' defined benefit plan design that maximizes contributions for older owners. What nondiscrimination issue should the CPC flag?

    Answer: Age-weighted allocations must pass general nondiscrimination testing under IRC Section 401(a)(4) on an equivalent basis

    Age-weighted or cross-tested plan designs must demonstrate compliance with Section 401(a)(4) nondiscrimination requirements, often using general testing to show non-HCEs receive equivalent effective benefit rates.

  6. A client's 401(k) plan has failed the ADP test. The CPC recommends a corrective distribution. What is the deadline for making corrective distributions to avoid the 10% excise tax on excess contributions?

    Answer: 2½ months after the close of the plan year

    Corrective distributions of excess contributions from a failed ADP test must be made within 2½ months after the close of the plan year to avoid the 10% excise tax imposed on the employer.