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Regulatory Compliance & Legal Framework Flashcards

7 cards from real RMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Compliance & Legal Framework flashcards as text

  1. Under ERISA, which party holds the highest standard of care when managing plan assets?

    Answer: Named fiduciary

    The named fiduciary bears the highest standard of care under ERISA and must act solely in the interest of plan participants.

  2. The IRS prohibited transaction rules under IRC Section 4975 apply primarily to which type of accounts?

    Answer: IRAs and qualified plans

    Section 4975 covers both IRAs and qualified plans, imposing excise taxes on prohibited transactions involving disqualified persons.

  3. Which DOL regulation requires plan fiduciaries to follow a documented process when selecting and monitoring investment options?

    Answer: DOL Regulation 2550.404a-1

    DOL Regulation 2550.404a-1 codifies the prudent investor standard by requiring fiduciaries to use a documented, process-oriented approach to investment selection.

  4. A retirement plan fails the ADP test. Which corrective action allows the plan to avoid disqualification by distributing excess contributions?

    Answer: Corrective distributions within 2.5 months

    Corrective distributions made within 2.5 months after the plan year end avoid the 10% excise tax and prevent plan disqualification.

  5. Which provision of ERISA generally prohibits a plan from using plan assets to benefit a party in interest?

    Answer: Section 406

    ERISA Section 406 prohibits transactions between a plan and a party in interest, such as loans or asset sales that benefit the fiduciary.

  6. Under the Pension Protection Act of 2006, which automatic enrollment feature provides a safe harbor for qualified default investment alternatives?

    Answer: QDIA safe harbor

    The QDIA safe harbor allows fiduciaries protection from liability when defaulting participants into approved investments such as target-date funds.

  7. If a 403(b) plan is subject to ERISA, which filing requirement applies annually?

    Answer: Form 5500

    ERISA-covered 403(b) plans must file Form 5500 annually, reporting plan assets, participants, and financial condition.