M6: Quizzes Flashcards
All of the following are core services provided by TPAs, except:
A. Preparation of Form 5500
B. Plan documents and amendments
C. Compliance testing
D. Investment selection and monitoring
D. Investment selection and monitoring
Page 10, Learning outcome 2.2 text pg 232
NAV stands for:
A. Net asset volume
B. Net active value
C. Net asset value
D. No asset value
C. Net asset value
Page 10, Learning outcome 2.3 text pg 232
In developing an outline to serve as a guide to various parties establishing a qualified retirement plan, there are 4 key areas of responsibilities. All of the following are responsibilities, except:
A. Plan design and implementation
B. Fiduciary responsibilities with plan investments
C. IRS and DOL compliance
D. FTC compliance
D. FTC compliance
Page 12, Learning outcome 2.5 text pg 234-235
Who does the DOL consider to be responsible for maintaining required plan record?
A. ERISA
B. The plan service provider
C. The employer
D. The plan administrator
D. The plan administrator
Page 13, Learning outcome 3.1 text pg 236
Under ERISA Section 107, plans required to file Form 5500 and related schedules must maintain a copy for a minimum of how many years after the filing date?
A. Six years
B. One year
C. Three years
D. Five years
A. Six years
Page 14, Learning outcome 3.2 text pg 236-237
Which of the following was most common default option for deferred compensation plans prior to the Pension Protection Act of 2006?
A. Stocks
B. Bonds
C. Money market funds
D. Mutual funds
C. Money market funds
Page 18, Learning Outcome 4.2, Test Page 244
Section _______ of ERISA requires plan administrators to retain records related to the determination of each employee’s benefit for what, in some cases, could turn out to be decades.
A. 107
B. 210
C. 106
D. 209
D. 209
Page 15, Learning Outcome 3.4, Test Page 238
In _______, the Pension Protection Act was enacted and brought forth the concept of Qualified Default Investment Alternatives (QDIAs).
A. 2003
B. 2006
C. 2005
D. 2002
B. 2006
Text, page 252
The Supreme Court reaffirmed the duties of retirement plan sponsors to monitor and update plan options with their finding in Court noted that a plan sponsor could not evade responsibility by offering “an adequate array of choices.”
A. Tibble v. Edison
B. Tibble v. Northwestern
C. Hughes v. Northwestern
D. Edison v. Northwestern
C. Hughes v. Northwestern
Page 7, Learning Outcome 1.2, Test Page 225
______ are the most popular default DC investment in the post-PPA world. This type of investment seeks higher returns by taking greater risk when workers are younger, because they have earnings as a cushion and they have a longer investment horizon to weather short-term volatilities.
A. Money market funds
B. TDFs
C. Balanced funds
D. Professionally managed accounts
B. TDFs
Page 18, Learning Outcome 4.2, Test Page 244
In January 2021, the court case of Hughes v. Northwestern University reaffirmed the duties of retirement plan sponsors.
True or False?
False
Fiduciaries should review recent changes in the law with an ERISA counsel, including court cases and government announcements.
True or False?
True
IRS and DOL compliance includes preparing Form 5500 and applicable schedules.
True or False?
True
The DOL considers the plan service provider, not the plan administrator, responsible for maintaining require plan records.
True or False?
False
Distribution records, including withholding and Forms 1099-R, are required to be kept for a minimum of five years after the 5500 filing.
True or False?
False
The physical copies of records can be transferred to electronic versions if the transfer results in legible, accurate copies that are reproducible.
True or False?
True
One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).
True or False?
True
When a 401(k) plan utilizes both an investment advisor and a TPA, the investment advisor typcially controls the client relationship.
True or False?
True
Unlike plan advisors, TPAs are particularly knowledgeable about mutual funds, collective investment trusts (CITs), different share classes, and active versus passive investments.
True or False?
False
TDFs currently use a single variable (age) to determine the appropriate TDF for a particular individual.
True or False?
True
In the Supreme Court case ____________, the decision dealt with the fiduciary risks of not paying careful attention to investment fees. It also addressed that a fixation on investment fees may disregard the best interest of plan participants.
A. Inland Steel v. National Labor Relations Board
B. W. W. Cross & Co. v. National Labor Relations Board
C. Tibble v. Edison
D. Taft-Hartley Act
Answer: C. Tibble v. Edison
Study Guide, Module 6, Page 1
When developing an outline to serve as a guide to parties establishing a qualified retirement plan, one of the four key areas is operational compliance. All of the following are part of the operational compliance area, EXCEPT:
A. Notifying employees of eligibility
B. Ensuring that contributions are deposited in a timely manner
C. Preparing required plan participant disclosures
D. Ensuring that the plan operates according to its terms
Answer: C. Preparing required plan participant disclosures
Study Guide, Module 6, Page 12, Learning Outcome 2.5(4);
Text, Pages 234-235
The court case that highlighted the fiduciary risks of not paying careful attention to investment fees was:
A. Edison v. Coyne
B. Hughes v. Northwestern University
C. Tibble v. Edison
D. Tibble v. Maine
C. Tibble v. Edison
The essence of the plaintiffs’ complaint in Tibble v. Edison was that plan sponsors had breached their duty of prudence by offering higher priced mutual funds when identical lower priced mutual funds were available. Plan sponsors offered:
A. Three more highly priced mutual funds.
B. Four more highly priced mutual funds.
C. Ten more highly priced mutual funds.
D. Six more highly priced mutual funds.
D. Six more highly priced mutual funds.
Plan fiduciaries should take steps to ensure that their approach to monitoring plan investments is ______ and _______.
A. Systematic and legal
B. Systematic and regular
C. Systematic and cautionary
D. Systematic and irregular
B. Systematic and regular
A(n) _______ is essential for assisting with the selection and monitoring of plan investments.
A. Counselor
B. Plan sponsor
C. Investment advisor
D. TPA
C. Investment advisor
The _______ considers the plan administrator, not the plan service provider, responsible for maintaining required plan records.
A. TPA
B. IRS
C. DOL
D. IPS
C. DOL
ERISA Section _____ requires plans that file Form 5500 and related schedules to maintain a copy of all the information used to arrive at these figures.
A. 109
B. 103
C. 107
D. 105
C. 107
A general requirement for the maintenance of electronic records by plan administrators includes ______.
A. The ability to convert records to a legible form.
B. No requirement for security, organizing, and backing up data.
C. No requirement to index, retain, preserve, and retrieve.
D. Imposing access restrictions.
A. The ability to convert records to a legible form.
Popular default options for defined contribution plans have changed since the Pension Protection Act of 2006. The change _______.
A. Moved defaults from stocks to money market funds.
B. Moved defaults from TDFs to money market funds
C. Moved defaults from money market funds to TDFs
D. Moved defaults from bonds to money market funds
C. Moved defaults from money market funds to TDFs
Section ______ of ERISA requires plan administrators to retain records related to the determination of each employee’s benefit for decades.
A. 109
B. 205
C. 107
D. 209
D. 209
Retirement plan committees should evaluate their target date funds on a(n) ________ basis.
A. Annual
B. Semi-monthly
C. Quarterly
D. Monthly
C. Quarterly
