Practice Test Geeks(CPC) Certified Pension Consultant Practice Test
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Retirement Plan Design & Administration 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 Retirement Plan Design & Administration flashcards as text

  1. A defined benefit plan uses a unit credit formula. An employee has 20 years of service and an average final salary of $80,000. If the benefit rate is 1.5% per year, what is the annual accrued benefit?

    Answer: $24,000

    The accrued benefit = 1.5% × 20 years × $80,000 = $24,000 per year.

  2. Which plan feature triggers the PBGC's variable-rate premium in addition to the flat-rate per-participant premium?

    Answer: Unfunded vested benefits in a single-employer DB plan

    PBGC charges a variable-rate premium based on the amount of unfunded vested benefits in single-employer defined benefit plans.

  3. A plan sponsor wants to add a cash balance formula alongside an existing final average pay formula in the same plan. What is this arrangement called?

    Answer: Hybrid plan

    A plan combining a traditional defined benefit formula with a cash balance formula is a hybrid plan design.

  4. Under IRC §415(b), what is the maximum annual benefit payable from a defined benefit plan to a participant who retires at age 62 in 2024?

    Answer: $275,000 actuarially reduced for early retirement

    The §415(b) limit of $275,000 (2024) is reduced actuarially when benefits commence before age 62; at exactly 62, the full limit applies before any actuarial reduction.

  5. Which nondiscrimination test specifically evaluates whether a plan provides benefits, rights, and features that do not discriminate in favor of highly compensated employees?

    Answer: General test under IRC §401(a)(4)

    IRC §401(a)(4) requires that contributions or benefits, rights, and features be nondiscriminatory, which is tested using the general test or safe harbor methods.

  6. A money purchase pension plan has a mandatory contribution rate of 10% of compensation. Can the employer skip contributions in a bad year?

    Answer: No, contributions are mandatory each year

    Money purchase pension plans require mandatory annual contributions at the stated rate regardless of profitability—this is what distinguishes them from profit-sharing plans.

  7. In a safe harbor 401(k) plan using the basic match formula, what is the required employer matching contribution?

    Answer: 100% of deferrals up to 3% of compensation, plus 50% of deferrals from 3% to 5%

    The basic safe harbor match is 100% on the first 3% of compensation deferred plus 50% on the next 2% (3%–5%), totaling a maximum match of 4%.