ASPPA Test Question

[Guest JeffC]

I am taking the ASPPA RPF-1 QKA test, and there are a few questions that don't seem to be covered in the material anywhere. Could someone point me in the right direction? I'm not asking for the answers, just suggestions, maybe, of something I might be overlooking.

Question 1.) All of the following statements regarding parties involved in plan operation are TRUE, EXCEPT:

A.) A retirement plan administration firm may provide ministerial functions

B.) A retirement plan consultant may be hired to perform the Form 5500 audit.

C.) An ERISA attorney may be hired to draft the plan document.

D.) An accountant may be employed to provide payroll services.

E.) A broker may be hired to provide participant investment advice.

I've found material in the textbook that supports ALL of these scenarios, and yet one must be false. What are your thoughts? Thanks in advance.

[Guest JeffC]

Here's another where there is information in the material that supports ALL of the statements being correct:

Question 2.) All of the following statements regarding benefits of a qualified plan are TRUE, EXCEPT:

A.) Taxation on distributions from qualified plans may be postponed via rollover.

B.) Participants may reduce current taxable income via elective deferrals.

C.) Required government filings help the DOL track the activities of the plan sponsor.

D.) Generally, benefits under a qualified plan accumulate tax-free until distribution.

E.) Contributions made by the plan sponsor may be tax deductible on the employer’s tax return.

Help? Please?

[Bill Presson]

I am taking the ASPPA RPF-1 QKA test, and there are a few questions that don't seem to be covered in the material anywhere. Could someone point me in the right direction? I'm not asking for the answers, just suggestions, maybe, of something I might be overlooking.

Question 1.) All of the following statements regarding parties involved in plan operation are TRUE, EXCEPT:

A.) A retirement plan administration firm may provide ministerial functions

B.) A retirement plan consultant may be hired to perform the Form 5500 audit.

C.) An ERISA attorney may be hired to draft the plan document.

D.) An accountant may be employed to provide payroll services.

E.) A broker may be hired to provide participant investment advice.

I've found material in the textbook that supports ALL of these scenarios, and yet one must be false. What are your thoughts? Thanks in advance.

I'll take a shot: I'm going to say that a retirement plan consultant can't perform the audit, unless he/she was also an accountant.

[mphs77]

Here's another where there is information in the material that supports ALL of the statements being correct:

Question 2.) All of the following statements regarding benefits of a qualified plan are TRUE, EXCEPT:

A.) Taxation on distributions from qualified plans may be postponed via rollover.

B.) Participants may reduce current taxable income via elective deferrals.

C.) Required government filings help the DOL track the activities of the plan sponsor.

D.) Generally, benefits under a qualified plan accumulate tax-free until distribution.

E.) Contributions made by the plan sponsor may be tax deductible on the employer’s tax return.

Help? Please?

My thought is that D is the culprit. Benefits under a qualified plan accumulate tax-deferred until distribution.

Of course, I could be reading more into it than I should.

[rcline46]

Question 2 - C - 5500 tracks activities of the PLAN, not the sponsor. Many of the questions require careful reading. Don't read into the question, but certainly read the question CAREFULLY

[Guest JeffC]

Thanks, Presson and mphs. Those were my thoughts, as well, I'm just not 100% sure. I've worked for a retirement plan company for almost 3 years, and I still find these questions confusing. The study material can be very ambiguous and non-specific. I'm trying to get with one of our senior people to get her thoughts, as well, but she's very busy, and hasn't had the time to sit down with me yet. There are a couple of other questions that I'm unsure about, also. I'll try to post them later this evening from home. If anyone else has any thoughts, please post them. Thanks again!

[buckaroo]

My answers would be

B for the first question because the auditor should be an accountant.

C for the second question because the filings help IRS, not the DOL.

[Guest JeffC]

Great points, rcline and buckaroo - awesome - thanks!

[david rigby]

For answer 2A, certain distributions from a QP can be rolled over, but not all distributions.

[Guest JeffC]

Thanks, David. I tend to agree with mphs about Question 2 - Answer D does say tax-free, but it's actually tax-deferred. But I'm still not 100% sure. But rcline makes a great point about Question 2, as well, in that the DOL tracks the activities of the plan, not the sponsor.

[Peanut Butter Man]

It has been a while since I worked for the government but the DOL, IRS and PBGC, as well as some other government agencies, use filings to track the activies of the plan sponsor as well as the plan.

[K2retire]

FWIW, although ASPPA says they don't write trick questions, these are excellent examples of why I don't believe them! And it only gets worse. (When I use my full signature there's a QPA and a QKA after it.)

[mphs77]

It has been a while since I worked for the government but the DOL, IRS and PBGC, as well as some other government agencies, use filings to track the activies of the plan sponsor as well as the plan.

"Other government agencies"?

Suppose Jack Bauer is going to begin to do 5500 audits next season?

[BG5150]

What kind of "activities" are tracked on the 5500? Contributions & Distributions, mostly. Maybe some fees. And investment balances.

My answer to question 2 is C.

On a side note: if the 5500 is an IRS form, why is it sent to EBSA (DOL)?

[Guest SuePerry]

I am one of the vice chairs for the ASPPA Education & Examination committee, the group within ASPPA that writes the exams. I am sorry that you are having difficulties with questions on the RPF exam. I suggest that you go back and carefully read the applicable sections of the textbook. You will find the answers are there. The committee leadership had the TEC who wrote the exam go back and verify that the answers were clearly in the text this morning. Since more than 93% of the candidates taking the test have gotten these two answers correct, we do not believe that the text is either ambiguous or non-specific. If you have specific concerns or issues on the exams, please feel free to address these directly with the ASPPA office or by sending me an email.

[Guest JeffC]

Thanks for the suggestions, Sue.

[Guest JeffC]

Upon further review of the test questions, here is a question on Test #2 that is a good example of an ambiguous test question:

All of the following are characteristics of an efficient investment offered in a daily valuation plan, EXCEPT:

A. Shares can be bought with dollars and change

B. Shares can be bought and sold in whole shares

C. Shares can be bought with cash dividends paid by the investment

D. Shares can be bought and sold daily

E. Share pricing information is available daily

A. From the education material: To be efficient, investments offered in daily valuation plans must: Be available for purchase in shares for the full dollars and cents available to be

spent. That would make this a true statment.

B. Shares can obviously be bought in whole shares, if the cash is available to buy them. For example, if a participant defers $10, and the share price is 5.50, the share could be bought and sold as a whole share. That would make this a true statement.

C. From the education material: To be efficient, investments offered in daily valuation plans must: Be set up so that dividends and other income immediately reinvest in the investment. That would make this a true statement.

D. From the education material: To be efficient, investments offered in daily valuation plans must: Be traded daily. That would make this a true statement.

E. From the education material: To be efficient, investments offered in daily valuation plans must: Have a price per share that can be obtained daily. That would make this a true statement.

In my opinion, all of these answers could reasonably be considered correct. However, ASPPA dictates that one of the answers is incorrect. Maybe I'm missing something, but it just doesn't make sense to me.

[GMK]

Just a guess, but being able to buy and sell whole shares, while obviously possible, does not by itself make the investment option efficient. Like the "dollars and cents" of item A, you'd want "whole and fractional" shares for item B.

[Guest JeffC]

I agree, GMK. I think the answer that ASPPA wants is that B is incorrect, although, technically, B can be considered a correct answer as well. Thanks for the input.

[WDIK]

JeffC:

My perception is that you may be trying to overthink these questions and making them more difficult than they are intended. I would suggest that you follow SuePerry's recommendation that the answers are found in the text and try to avoid bringing in thoughts or logic from outside of the prepared materials.

[david rigby]

... try to avoid bringing in thoughts or logic from outside of the prepared materials.

Hmmm. Does this make it a good test and/or question?