CPC Fiduciary Responsibility & Compliance Standards 2

Question 1

Under ERISA, which action by a plan fiduciary constitutes a prohibited transaction?

Accepted Answer

Lending plan assets to a party in interest at market rates without exemption

Answer

ERISA Section 406 prohibits loans of plan assets to parties in interest unless a specific statutory or administrative exemption applies.

Question 2

The 'exclusive benefit' rule under ERISA Section 404 requires that plan assets be used:

Accepted Answer

Exclusively for the benefit of participants and their beneficiaries

Answer

ERISA Section 404(a)(1) mandates that fiduciaries act solely in the interest of participants and beneficiaries for the exclusive purpose of providing benefits.

Question 3

A plan fiduciary who delegates investment management to a qualified investment manager under ERISA Section 402(c)(3) is relieved of liability for:

Accepted Answer

Acts and omissions of the investment manager once properly appointed

Answer

Once a named fiduciary properly appoints a qualified investment manager, the appointing fiduciary is not liable for acts or omissions of that manager.

Question 4

Which document establishes the investment guidelines and objectives that a plan's investment manager must follow?

Accepted Answer

Investment Policy Statement (IPS)

Answer

An Investment Policy Statement sets forth the plan's investment goals, risk tolerance, asset allocation targets, and manager selection criteria.

Question 5

Under ERISA's co-fiduciary liability rules, a fiduciary can be held liable for another fiduciary's breach if the first fiduciary:

Accepted Answer

Knowingly participated in or concealed the breach

Answer

ERISA Section 405(a) imposes co-fiduciary liability when a fiduciary knowingly participates in, enables, or conceals another fiduciary's breach.

(CPC) Certified Pension Consultant Practice Test

(CPC) Certified Pension Consultant Practice Test

CPC Fiduciary Responsibility & Compliance Standards 2