M6:

Question 1

Default options for DC plans prior to PPA Act of 2006

Answer 1

Money Market Funds

Question 2

Most popular default DC investments post-PPA

Answer 2

TDFs

Question 3

One basis point

Answer 3

Equal to 1/100th of 1% or 0.01%

Question 4

May 18, 2015 Court case ruling that plan sponsors have a continuing duty to review investments in retirement plans and to decide whether or not to keep or sell them.

Answer 4

Tibble vs. Edison

Question 5

What is the time limit for filing a lawsuit for breach of fiduciary duty?

Answer 5

No more than six years after the date of the last action

Question 6

Passing of this law is when DC plans shifted from money market to TDF funds as a default

Answer 6

Pension Protection Act (PPA) of 2006

Question 7

Tax-exempt, pooled investment vehicles maintained by a bank or trust company and are available only to ERISA qualified retirement accounts. These trusts are exempt from many of the regulatory requirements that drive mutual fund expenses which generally give them a fee advantage over mutual funds.

Answer 7

Collective Investment Trusts (CITs)

Question 8

Measurements of value of mutual funds in accounts owned by an insurance co.

Answer 8

Accumulation Unit Value

Question 9

ERISA section that requires plan info be kept a minimum of 6 years after the filing date of Form 5500.

Type of records: Certified audits, appraisals, distribution records such as 1099-Forms, reconciliation of deposits to deductions taken on corporate income tax returns. Plans must also maintain data on highly compensated employee and key employee determinations, and payroll information for all employees used to determine eligibililty.

Answer 9

ERISA Sec. 107

Question 10

ERISA section requires the employer to retain all records necessary to determine the benefit that is due (or may become due) to each participant, but there is no specific period of time provided for retention of this information.

Answer 10

ERISA Sec 209

Question 11

Under what requirement can physical documents be converted to
electronic?

Answer 11

If transferred documents are legible, accurate, & reproducible

Question 12

Responsible for developing company objectives, making decisions regarding the plan and ensuring that all plan transactions are executed in a timely fashion.

Answer 12

Plan Sponsor

Question 13

Who is responsible for plan documents, compliance testing, and filing form 5500’s

Answer 13

Core services provided by TPAs

Question 14

Value per share of a mutual fund or ETF on a specific date/time.

Answer 14

Net Asset Value (NAV)

Question 15

Responsible for preparation of plan documents and amendments, compliance testing, preparation of Forms 5500, loan and distribution processing.

Answer 15

TPA

Question 16

Funds that seek higher returns by taking greater risk when workers are younger. As the worker gets older, the risky proportion decreases to mitigate potential loss.

Answer 16

Target Date Funds (TDFs)

Question 17

Responsible for selecting service providers, filing IRS and DOL forms, distributing summary annual reports and ensuring operational compliance.

Answer 17

Plan Administrator

Question 18

Party that is obligated to assess and negotiate plan fees

Answer 18

Fiduciary

Question 19

How often committees should evaluate the plan’s TFDs

Answer 19

Quarterly

Question 20

Entity responsible for creation and maintenance of IPS policy statement

Answer 20

Fiduciary

Question 21

2022 Court case stated that a plan sponsor could not avoid responsibility by offering an array of choices. They must remove a less than optimal investment from the plan and do so within a reasonable amount of time.

Answer 21

Hughes v Northwestern University

Question 22

Responsible for making investment selections, monitor plan reviews, and participate in negotiations and employee education. They are knowledgable about mutual funds and collective invest trusts as well as different share classes.

Answer 22

Plan Advisors

Question 23

4 key areas of responsibilities and functions related to establishing and administering a qualified retirement plan

Answer 23

(1) Plan design and implementation
(2) Fiduciary responsibilities with plan investments
(3) IRS and DOL compliance
(4) Operational compliance

Question 24

Tasked with enrolling participants and compiling information to be given to participants.

Answer 24

Record-keeper

Question 25

68% of worker weatlh accumulation upon retirement is the result of savings, 38% is investing, and 6% fees which is a negative impact.

Answer 25

Analysis of average worker savings

Question 26

The greatest force in saving for retirement

Answer 26

Saving rigorously and consistenly