CPC Fiduciary Responsibility & Compliance Standards 3

Question 1

Under ERISA Section 3(38), an 'investment manager' must be all of the following EXCEPT:

Accepted Answer

A licensed broker-dealer registered with FINRA

Answer

ERISA Section 3(38) defines an investment manager as an RIA, bank, or insurance company that acknowledges fiduciary status in writing; broker-dealer registration alone does not qualify.

Question 2

The 'named fiduciary' requirement under ERISA Section 402(a) serves what primary purpose?

Accepted Answer

To identify at least one person with authority to control and manage plan operations, ensuring accountability

Answer

ERISA requires every plan to have a named fiduciary so participants and the DOL can identify who is responsible for plan management and operations.

Question 3

Which of the following is NOT a fiduciary duty under ERISA's Section 404 standards?

Accepted Answer

Maximizing investment returns regardless of risk

Answer

ERISA requires prudence and diversification, not return maximization—fiduciaries must balance risk and return, not simply chase the highest returns.

Question 4

A plan administrator fails to provide a participant with a requested Summary Plan Description within the ERISA-mandated timeframe. The maximum civil penalty per day is:

Accepted Answer

$110

Answer

The DOL can assess a civil penalty of up to $110 per day (periodically adjusted for inflation) for failing to provide required documents to participants upon request.

Question 5

The concept of 'settlor functions' is important in fiduciary analysis because:

Accepted Answer

Decisions about plan design and establishment are generally not fiduciary acts

Answer

Courts and the DOL distinguish between settlor functions (plan design, amendment, termination) which are business decisions, and fiduciary functions (plan administration) which trigger ERISA duties.

(CPC) Certified Pension Consultant Practice Test

(CPC) Certified Pension Consultant Practice Test

CPC Fiduciary Responsibility & Compliance Standards 3