NAPA QPFC Qualified Plan Financial Consultant

Under ERISA §404(a)(1)(B), an investment advisor servicing a 401(k) plan must act with the care, skill, prudence, and diligence of a person who is familiar with such matters. This is commonly referred to as which standard?

• AThe prudent expert standard
• BThe reasonable layperson standard
• CThe good-faith effort standard
• DThe arm's-length transaction standard

ERISA §404(a)(1)(A) requires a fiduciary to discharge duties solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable expenses. This obligation is best described as the duty of:

• ALoyalty
• BDiversification
• CFollowing plan documents
• DCare

Which of the following functions performed for a 401(k) plan would NOT, by itself, make a person an ERISA fiduciary under §3(21)(A)?

• AProcessing payroll deferrals according to participant instructions with no discretion
• BExercising discretionary authority over plan administration
• CRendering investment advice for a fee with respect to plan assets
• DSelecting the investment lineup made available to participants

An advisor signs an agreement assuming ERISA §3(38) status for the investment menu of a participant-directed 401(k) plan. What is the resulting allocation of investment-selection fiduciary responsibility?

• AThe §3(38) manager has full discretionary authority and bears fiduciary liability for the…
• BThe plan sponsor remains fully liable for individual fund selections; the §3(38) appointm…
• CLiability is shared 50/50 between the §3(38) manager and the plan sponsor
• DThe §3(38) appointment shifts all fiduciary liability, including the duty to monitor, to…

An advisor agrees to provide ERISA §3(21) co-fiduciary investment advice to a 401(k) plan committee. How does this engagement differ from an ERISA §3(38) engagement?

• AA §3(21) advisor recommends investments but the plan fiduciary retains discretion and dec…
• BA §3(21) advisor must be a registered investment adviser; a §3(38) manager may be any ser…
• CA §3(21) advisor takes on all investment liability; a §3(38) manager only provides recomm…
• DA §3(21) advisor cannot be paid for advice; a §3(38) manager may be

ERISA §404(c) is best characterized as:

• AA safe harbor that relieves fiduciaries of liability for losses resulting from a particip…
• BA mandatory requirement that all 401(k) plans offer participant-directed investments
• CA prohibition on plan fiduciaries selecting investment options on behalf of participants
• DA rule that converts every participant into an ERISA co-fiduciary

To meet the §404(c) broad range of investment alternatives requirement, the plan must offer at least how many investment alternatives with materially different risk and return characteristics?

• AThree
• BTwo
• CFive
• DTen

Which of the following losses is NOT covered by the §404(c) fiduciary safe harbor even when all regulatory conditions are met?

• ALosses arising from the imprudent selection or retention of an investment option on the p…
• BLosses from a participant's poor asset allocation among the available options
• CLosses from a participant's failure to rebalance after a market downturn
• DLosses from a participant choosing the most aggressive fund despite a short time horizon

ERISA §405(a) describes co-fiduciary liability. Under which condition is a fiduciary liable for another fiduciary's breach of duty?

• AKnowingly participating in or concealing the breach, enabling the breach through one's ow…
• BBeing on the same plan committee at any time during the breach period
• CReceiving any compensation, even reasonable, from the plan during the breach
• DHolding a license required to provide services to the plan

An advisor recommends that the plan sponsor hire a relative's firm as recordkeeper. Even though the proposed fees are reasonable, this raises a fiduciary concern primarily because:

• AThe duty of loyalty under §404(a)(1)(A) requires acting solely in the interest of partici…
• BRecordkeepers must be unrelated to all plan advisors by federal statute
• CAll related-party transactions are per se prohibited under §406 regardless of pricing
• DThe duty of diversification prohibits hiring small firms

ERISA §406(a)(1) prohibits a fiduciary from causing the plan to engage in certain transactions with a party in interest. Which of the following is NOT one of those prohibited transactions?

• AInvesting plan assets in a publicly traded index mutual fund offered by an unrelated inve…
• BA sale, exchange, or lease of property between the plan and a party in interest
• CA loan or other extension of credit between the plan and a party in interest
• DFurnishing of goods, services, or facilities between the plan and a party in interest

ERISA §406(b) addresses fiduciary self-dealing. Which conduct is barred?

• AA fiduciary dealing with plan assets in his own interest, acting on both sides of a trans…
• BA fiduciary attending an annual industry conference paid for by the employer
• CA fiduciary being paid reasonable compensation by the plan for services rendered
• DA fiduciary holding any personal investment account at the same custodian as the plan

Under ERISA §408(b)(2), a contract for services between a plan and a party in interest is exempt from §406(a) prohibitions only if:

• AThe contract is for services necessary to operate the plan, the contract is reasonable, a…
• BThe party in interest waives any markup on services rendered
• CThe plan's named fiduciary personally signs every invoice
• DThe contract is exclusively with a non-profit provider

Under the §408(b)(2) regulation, a covered service provider expecting at least $1,000 in compensation must disclose, in writing and reasonably in advance of entering or extending a contract, all of the following EXCEPT:

• AThe investment-by-investment alpha, beta, and Sharpe ratios for every fund recommended to…
• BA description of the services to be provided
• CAll direct and indirect compensation expected to be received in connection with the servi…
• DWhether the provider expects to serve as an ERISA fiduciary or as a registered investment…

A 401(k) plan's covered service provider fails to deliver the §408(b)(2) disclosures. What is the responsible plan fiduciary's required action to preserve the §408(b)(2) exemption?

• ARequest the missing disclosures in writing; if they are not provided within 90 days, term…
• BImmediately cease all participant deferrals to the plan until disclosures arrive
• CReduce participant fees by 50% as compensation for the late disclosure
• DFile a Form 5500 amendment within 30 days

Under 29 CFR §2550.404a-5, a participant in a §404(c) plan must receive annual disclosure of each designated investment alternative's:

• A1-, 5-, and 10-year average annual total returns alongside a comparable broad-based secur…
• BManager's home address and Social Security number
• CDaily holdings and trade blotter for the past 12 months
• DYear-by-year tax-equivalent yields

When must the §404a-5 quarterly participant fee statement be furnished?

• AAt least quarterly, showing the dollar amount of plan-related fees and expenses actually…
• BAnnually, in dollar amounts only
• COnly when the participant requests it
• DOnly when fees change by more than 10%

Which of the following is included in the §404a-5 definition of plan-related information that must be disclosed to participants?

• AGeneral plan information about how participants give investment instructions, voting/tend…
• BThe plan sponsor's audited consolidated financial statements
• CThe recordkeeper's employee compensation schedule
• DDaily NAV histories for every fund on the menu

An Investment Policy Statement (IPS) for an ERISA participant-directed plan generally should address all of the following EXCEPT:

• AA guarantee of investment results meeting specified return targets
• BRoles and responsibilities of the named fiduciary, investment committee, and any §3(21) o…
• CCriteria for selecting, monitoring, and replacing designated investment alternatives
• DAsset-class coverage required on the lineup and the role of a QDIA

An IPS describes a quantitative manager-monitoring screen requiring rolling 3- and 5-year returns above the peer group median. A fund underperforms the screen for two consecutive quarters. The most defensible immediate action is to:

• APlace the fund on a documented watch list, perform a qualitative review of personnel, pro…
• BImmediately remove the fund from the lineup to avoid liability exposure
• COverride the IPS to keep the fund because changes are disruptive
• DReplace the IPS to remove the underperforming screen

An IPS that includes overly specific quantitative triggers (for example, mandatory removal after a single quarter of bottom-quartile performance) is generally considered:

• ARisky because it can force imprudent short-term decisions that breach §404(a)(1)(B); IPS…
• BOptimal because it removes discretion and therefore eliminates fiduciary risk
• CRequired by ERISA §404(a)(1)(C)
• DRequired by the §404(c) safe-harbor regulations

Under the DOL's Qualified Default Investment Alternative (QDIA) regulation, 29 CFR §2550.404c-5, which of the following is NOT a permitted QDIA type?

• AA money market fund used as the long-term default for newly enrolled participants
• BA target-date or life-cycle fund based on the participant's age or expected retirement da…
• CA balanced fund whose asset allocation reflects the demographics of the participant popul…
• DA managed account with allocation based on the participant's individual circumstances

To obtain QDIA fiduciary relief under 29 CFR §2550.404c-5, what advance notice must participants receive?

• AAt least 30 days before the participant's first investment in the QDIA (or, for immediate…
• BOnly at the participant's first annual enrollment meeting
• CNo notice is required as long as the QDIA is a target-date fund
• DNotice must be provided every 60 days during the participant's first year

QDIA fiduciary relief generally extends to:

• ALosses that result from investing default contributions in a properly designated QDIA, wh…
• BAll losses from the plan's investment menu, including non-default options
• CRecordkeeper errors causing missed deferrals
• DParticipant claims of suitability mismatch even when the QDIA was properly selected

Two target-date funds have the same target retirement year. Fund A continues to reduce equity exposure for 30 years after the target date; Fund B reaches its most conservative allocation at the target date. The fund families would respectively be described as having:

• AFund A: through-retirement glide path; Fund B: to-retirement glide path
• BFund A: to-retirement glide path; Fund B: through-retirement glide path
• CBoth as defensive glide paths
• DBoth as aggressive glide paths

The DOL's 2013 Target Date Retirement Funds Tips for ERISA Plan Fiduciaries recommend that fiduciaries:

• AEstablish a process to compare and select TDFs (including review of the glide path, fees,…
• BAlways select the recordkeeper's affiliated TDF series for operational efficiency
• CChoose the TDF series with the lowest expense ratio without further analysis
• DOutsource TDF selection to the participant population by vote

When evaluating a target-date fund's underlying construction, a passive series is most accurately described as one that:

• AAllocates among low-cost index funds tracking benchmark indices and follows a pre-set gli…
• BAvoids any equity allocation in the post-retirement portion of the glide path
• CUses only mutual funds (never collective investment trusts) as underlying holdings
• DHolds 100% Treasury securities until the target date is reached

Two TDF series targeting 2040 retirement have these equity allocations at the 2040 vintage: Series X 75%, Series Y 50%. Which statement is most accurate?

• ASeries X carries greater near-retirement equity risk and may be more suitable for plans w…
• BSeries Y is per se imprudent because it provides too little equity exposure
• CSeries X is per se imprudent because it provides too much equity exposure
• DGlide-path equity allocations at the vintage have no fiduciary significance

A recordkeeper that provides participant statements, processes distributions, performs ADP/ACP testing, and prepares Form 5500 attachments is most accurately described as offering:

• ABundled (full-service) recordkeeping including administration and compliance services
• BPure custody only
• CTrustee services only
• DInvestment advisory services only

An open-architecture recordkeeping platform differs from a proprietary platform in that:

• AAn open-architecture platform allows the plan to select investments across multiple fund…
• BOpen-architecture platforms require the use of collective investment trusts only
• CProprietary platforms always charge lower fees than open-architecture
• DOpen-architecture platforms eliminate the need for revenue sharing

Revenue sharing in a 401(k) recordkeeping arrangement refers to:

• APayments made by mutual fund families (such as 12b-1 fees, sub-TA fees, or shareholder se…
• BProfit-sharing contributions deposited by the employer
• CDistributions of plan trust earnings paid to forfeitures
• DSurplus credits returned to the IRS

Which retirement-class share is most commonly used by 401(k) plans and typically carries the LOWEST expense ratio with little or no revenue sharing?

• AR6 (institutional retirement)
• BR1
• CR2
• DA shares

A 401(k) plan uses higher-cost share classes that pay revenue sharing to the recordkeeper, with the excess credited to the plan via an ERISA budget account. To meet the prudent fiduciary process, the responsible plan fiduciary should:

• ADocument whether a lower-cost share class is available with explicit hard-dollar recordke…
• BAlways use the lowest-cost share class regardless of the revenue-sharing/ERISA-budget ben…
• CAvoid using ERISA budget accounts entirely
• DDefault to whatever share class the recordkeeper recommends

A formal recordkeeper benchmarking or RFI exercise to support the fiduciary duty of monitoring fees and services is most commonly recommended on what cadence?

• AApproximately every 3 to 5 years, with annual fee benchmarking in between
• BEvery 10 to 15 years
• COnly when the recordkeeper raises fees
• DOnly when a participant complains

Under ERISA §404(a)(1)(C), a fiduciary must diversify plan investments so as to minimize the risk of large losses unless under the circumstances:

• AIt is clearly prudent not to do so
• BParticipants vote to waive diversification
• CThe plan document specifies a concentrated portfolio
• DThe investments are all rated investment grade

ERISA §407 generally limits a defined contribution plan's holding of employer securities to no more than 10% of plan assets, with an important exception. The exception is:

• AAn eligible individual account plan (such as a 401(k) with an employer-stock fund or an E…
• BAny plan with more than 100 participants
• CAny plan whose sponsor is a public company
• DAny plan that has filed Form 5500 for three consecutive years

ERISA §401(b)(1) exempts certain mutual fund shares from being treated as plan assets even when the plan invests in the fund. This is referred to as the:

• AMutual-fund plan-assets exception, under which the look-through plan-assets regulation do…
• BInsurance contract exception
• CGovernment plan exception
• DSection 408(c) exception

Under the DOL plan-assets regulation, 29 CFR §2510.3-101, equity participation in an entity that is not a registered investment company or operating company will cause the plan's investment to be treated as plan assets unless:

• AEquity participation by benefit plan investors is not significant (less than 25% of any c…
• BThe investment is held for less than 12 months
• CThe investment is denominated in U.S. dollars
• DParticipants individually authorize the investment

Plan fiduciaries evaluating an ESG-themed investment for the 401(k) menu should, under the DOL's 2022 final rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, primarily focus on:

• ARisk and return factors that are material to the investment's expected economic value to…
• BWhether the fund's manager publicly endorses every social policy of the current administr…
• CThe political affiliations of the fund's portfolio managers
• DWhether the fund explicitly excludes the fossil-fuel sector

As of May 2026, the DOL's 2024 Retirement Security Rule (which would have broadly redefined investment-advice fiduciary status) is best described as:

• AVacated by the U.S. District Court for the Northern District of Texas, with the DOL havin…
• BFully effective as of the original September 2024 implementation date
• CPending before the U.S. Supreme Court for a final decision
• DEffective only for IRA rollover recommendations and rescinded for all other transactions

The SECURE 2.0 Act of 2022 mandates that, beginning with plan years on or after January 1, 2025, most newly established 401(k) and 403(b) plans must include automatic enrollment. The required minimum initial default deferral rate range is:

• ABetween 3% and 10%, with automatic escalation of at least 1% per year up to a minimum of…
• BExactly 6%, with no escalation
• CBetween 1% and 3%, with no escalation
• DAt least 12%, with no escalation

Under SECURE 2.0 §603, beginning January 1, 2026 (as extended by IRS Notice 2023-62 and finalized guidance), age-50 catch-up contributions made to a 401(k), 403(b), or governmental 457(b) plan by participants with prior-year FICA wages above $145,000 (indexed) from the same employer must be designated as:

• ARoth contributions
• BPre-tax contributions
• CAfter-tax non-Roth contributions
• DEmployer matching contributions

Under SECURE 2.0 §110, an employer may, for plan years beginning after December 31, 2023, treat qualified student loan payments by an employee as:

• AElective deferrals for purposes of an employer matching contribution under a 401(k), 403(…
• BMandatory after-tax employee contributions
• CRoth conversions from existing pre-tax balances
• DHardship distributions exempt from the 10% early-withdrawal penalty

Under SECURE 2.0 §127, plan sponsors may offer pension-linked emergency savings accounts (PLESAs) to non-highly-compensated employees. Contributions may not exceed:

• AAn account balance of $2,500 (or a lower limit the sponsor selects); contributions are af…
• B$10,000 per year
• C$500 per year
• DThe §402(g) elective deferral limit

The 2026 IRC §402(g) elective deferral limit for a 401(k) plan participant under age 50 is:

• A$24,500
• B$23,500
• C$22,500
• D$25,000

The 2026 IRC §414(v) age-50 catch-up contribution limit for 401(k), 403(b), and governmental 457(b) plans is:

• A$8,000
• B$7,500
• C$10,000
• D$11,250