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
A CPC is advising a client on selecting between a defined benefit plan and a cash balance plan. Which factor most strongly favors a cash balance plan for a small professional services firm?
Answer: Simpler administration and portability of benefits for younger, mobile employees
Cash balance plans combine DB-level tax advantages with DC-style account-based portability, making them attractive when the workforce values lump-sum flexibility over annuity payments.
When advising a client on a plan design change, what is the CPC's first obligation?
Answer: Understand the employer's workforce goals, retirement objectives, and budget constraints before recommending any design
Effective pension consulting begins with a thorough needs assessment: understanding employer objectives, workforce demographics, budget constraints, and desired plan outcomes before recommending any design.
A CPC is performing a plan audit in preparation for an IRS examination. Which area represents the highest risk for qualified plan disqualification?
Answer: Systematic failure to satisfy IRC Section 410(b) minimum coverage or IRC Section 401(a)(4) nondiscrimination requirements
Sustained failures of minimum coverage or nondiscrimination requirements are among the most serious qualification failures and are primary audit targets because they suggest the plan benefits only highly compensated employees.
A client asks whether to adopt a safe harbor 401(k) plan. Which statement is correct regarding the safe harbor design?
Answer: Safe harbor plans are exempt from ADP and ACP testing but must still satisfy the top-heavy minimum contribution rules in most cases
Safe harbor 401(k) plans are exempt from ADP/ACP testing but are generally still subject to top-heavy rules unless the only employer contributions are the safe harbor contributions.
Which scenario is most likely to benefit from a defined benefit plan paired with a profit-sharing plan (DB/DC combo)?
Answer: A small firm with older owner-employees seeking maximum retirement contributions well above the 401(k) limit
DB/DC combos allow older owner-employees to maximize contributions far beyond the standalone 401(k) limits by combining the age-weighted DB contribution with DC allocations.
A plan sponsor with 400 participants asks a CPC to benchmark their 401(k) plan fees. What should the CPC recommend as the basis for the fee evaluation?
Answer: Evaluate all fees (investment, recordkeeping, advisory) relative to services received and comparable market alternatives for similar-sized plans
Fee benchmarking requires evaluating the reasonableness of all plan costs relative to the services provided and market rates for comparable plans, consistent with the fiduciary duty to pay only reasonable plan expenses.