Certified Plan Sponsor Professional (CPSP) Practice Exam

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What must participants be informed about under QACA?

The investment options available
The ability to transfer funds to another account
The plan's current asset allocation
The deferral percentage and the right to change or opt out

The correct answer is: The deferral percentage and the right to change or opt out

Participants must be informed about the deferral percentage and their right to change or opt out under the Qualified Automatic Contribution Arrangement (QACA). This requirement is crucial, as QACA is designed to encourage participation in retirement savings plans by automatically enrolling eligible employees and gradually increasing their contribution rates unless they actively choose to opt-out or make adjustments. Providing this information ensures participants understand their savings options, including how much of their paycheck will be deferred into the retirement plan and what choices they have for adjusting that deferral rate. Transparency regarding their rights encourages informed decision-making regarding their retirement savings. The other choices, while important components of overall plan information, do not capture the specific focus of QACA on deferral rates and participant rights in the context of automatic enrollment features.