CPC CPC Consulting Skills & Client Advisory 1

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

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.

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

Effective pension consulting begins with a thorough needs assessment: understanding employer objectives, workforce demographics, budget constraints, and desired plan outcomes before recommending any design.

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

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.

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 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.

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

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.

(CPC) Certified Pension Consultant Practice Test

(CPC) Certified Pension Consultant Practice Test

CPC CPC Consulting Skills & Client Advisory 1