CPC CPC Consulting Skills & Client Advisory

Question 1

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?

Accepted Answer

Simpler administration and portability of benefits for younger, mobile employees

Answer

The need for the highest possible contribution limits for older, higher-earning owners

Answer

The ability to use the cross-tested allocation formula

Answer

Avoidance of PBGC premiums

Question 2

When advising a client on a plan design change, what is the CPC's first obligation?

Accepted Answer

Understand the employer's workforce goals, retirement objectives, and budget constraints before recommending any design

Answer

Recommend the design that minimizes the employer's cost

Answer

Recommend the design that maximizes participant benefits

Answer

Obtain IRS pre-approval before discussing any plan design changes

Question 3

A CPC is performing a plan audit in preparation for an IRS examination. Which area represents the highest risk for qualified plan disqualification?

Accepted Answer

Systematic failure to satisfy IRC Section 410(b) minimum coverage or IRC Section 401(a)(4) nondiscrimination requirements

Answer

Minor administrative errors in investment elections

Answer

Infrequent participant notices about investment options

Answer

Delays in filing Form 5500 by fewer than 30 days

Question 4

A client asks whether to adopt a safe harbor 401(k) plan. Which statement is correct regarding the safe harbor design?

Accepted Answer

Safe harbor plans are exempt from ADP and ACP testing but must still satisfy the top-heavy minimum contribution rules in most cases

Answer

Safe harbor plans eliminate all nondiscrimination testing including top-heavy rules

Answer

Safe harbor plans require employer contributions of at least 5% of compensation for all eligible employees

Answer

Safe harbor plans are only available to employers with fewer than 100 employees

Question 5

Which scenario is most likely to benefit from a defined benefit plan paired with a profit-sharing plan (DB/DC combo)?

Accepted Answer

A small firm with older owner-employees seeking maximum retirement contributions well above the 401(k) limit

Answer

A company with many young employees and a modest payroll

Answer

A large corporation seeking to minimize PBGC premiums

Answer

A startup with variable revenue and no consistent profits

Question 6

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?

Accepted Answer

Evaluate all fees (investment, recordkeeping, advisory) relative to services received and comparable market alternatives for similar-sized plans

Answer

Compare total fees to the plan's 5-year investment returns only

Answer

Focus only on investment management expense ratios

Answer

Accept the bundled fee quoted by the plan's current provider without comparison