Certified Plan Sponsor Professional (CPSP) Practice Exam

What must plans ensure regarding their benefits and rights provision?

1. Non-discrimination towards employees

2. Provision of minimum benefits only

3. Flexibility for plan sponsors

4. Regular updates on regulations

The correct answer is: Non-discrimination towards employees

Plans must ensure non-discrimination towards employees because this principle is a foundational element of employee benefit laws, particularly under regulations such as the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Non-discrimination provisions are designed to ensure that all eligible employees, regardless of characteristics like salary level, job status, or demographic group, have equal access to benefits. This helps promote fairness and equity within the workplace, preventing any undue advantages for certain groups of employees over others. By adhering to non-discrimination policies, plans foster an inclusive environment that rewards participation rather than penalizing individuals based on their position or other factors that don't reflect their contributions to the organization. This is crucial for maintaining a harmonious workplace culture and compliance with legal requirements. Other options, such as focusing solely on minimum benefits or allowing flexibility for plan sponsors, do not emphasize the importance of fair treatment among all employees. Regular updates on regulations, while important for compliance, do not directly tie into the equitable distribution of benefits among plan participants. Thus, ensuring non-discrimination is the most critical aspect in the context of employee benefit plans.