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Fiduciary Responsibility & Compliance Standards Flashcards

7 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 7 Fiduciary Responsibility & Compliance Standards flashcards as text

  1. Under ERISA, the statute of limitations for a fiduciary breach claim is generally:

    Answer: The earlier of 6 years from the breach or 3 years from actual knowledge of the breach

    ERISA Section 413 sets the limitations period at 6 years from the date of the breach or 3 years from actual knowledge of the breach, whichever is earlier.

  2. The DOL's Voluntary Fiduciary Correction Program (VFCP) covers which type of transaction?

    Answer: Failure to deposit participant contributions to the trust in a timely manner

    The VFCP specifically covers late deposit of participant contributions and other enumerated prohibited transactions, allowing self-correction with DOL approval.

  3. Which ERISA provision requires plan fiduciaries to follow the plan document unless doing so would violate ERISA?

    Answer: ERISA Section 404(a)(1)(D)

    ERISA Section 404(a)(1)(D) requires fiduciaries to act in accordance with plan documents and instruments, provided they conform with ERISA's other provisions.

  4. A plan fiduciary hires their spouse's consulting firm to provide administrative services without competitive bidding. This arrangement most likely violates:

    Answer: ERISA Section 406(b) self-dealing prohibition for fiduciaries

    ERISA Section 406(b) prohibits fiduciaries from dealing with plan assets for their own account or acting on behalf of parties whose interests are adverse to participants, including using their position to benefit family members.

  5. Under ERISA's reporting and disclosure requirements, the Summary Annual Report (SAR) must be distributed to participants within how many months after the plan year ends?

    Answer: 9 months

    The SAR must generally be furnished to participants within 9 months after the close of the plan year (or 2 months after the extended Form 5500 due date).

  6. Which of the following best describes the 'three-part test' the DOL uses to determine if investment advice constitutes fiduciary advice?

    Answer: The advice must be rendered on a regular basis pursuant to a mutual agreement, be the primary basis for investment decisions, and be individualized to the plan

    The DOL's traditional five-part test (now modified) includes: regular basis, mutual agreement or understanding, primary basis for decisions, individualized advice, and compensation—making the advice fiduciary investment advice.

  7. A plan sponsor amends the plan to reduce future benefit accruals. Under ERISA's anti-cutback rule (Section 411(d)(6)), the plan sponsor:

    Answer: Cannot reduce benefits already accrued as of the amendment's effective date

    ERISA Section 411(d)(6) prohibits plan amendments that reduce or eliminate benefits already accrued—future accruals can be reduced, but past accruals are protected.