Certified Plan Sponsor Professional (CPSP) Practice Exam

What is the role of a CPA in the administration of a retirement plan?

1. Employee communication

2. Investment advice

3. Tax compliance and filing

4. Eligibility monitoring

The correct answer is: Tax compliance and filing

The role of a Certified Public Accountant (CPA) in the administration of a retirement plan primarily revolves around tax compliance and filing, making it the most relevant choice. A CPA ensures that the retirement plan adheres to applicable tax laws and regulations, including contributions, distributions, and overall plan structure. They are responsible for preparing the necessary tax filings and forms that the plan must submit, such as Form 5500, which provides the Internal Revenue Service with information about the plan's financial condition, investments, and operations. While other areas such as employee communication, investment advice, and eligibility monitoring are vital functions in retirement plan administration, these responsibilities do not typically fall under the purview of a CPA. For instance, employee communication often requires skills in human resources or benefits advising; investment advice is typically provided by financial advisors or investment managers; and eligibility monitoring is typically managed by plan administrators or HR professionals. The CPA's expertise in accounting and tax law is crucial for ensuring that the retirement plan operates within legal frameworks and maintains its tax-efficient status, making tax compliance and filing the correct answer.