Certified Plan Sponsor Professional (CPSP) Practice Exam

Which of the following is essential for assessing the plan's compliance with regulations?

1. Regular participant surveys

2. Annual plan audits

3. Biannual retirement account reviews

4. Monthly financial tracking

The correct answer is: Annual plan audits

The selection of annual plan audits as the correct answer emphasizes their critical role in evaluating a plan's compliance with regulations. Annual audits are structured evaluations conducted by independent auditors who assess various aspects of a retirement plan, including adherence to applicable laws and regulations, financial reporting accuracy, and operational compliance. These audits help ensure that the plan is being managed properly, that the assets are secure, and that all fiduciary responsibilities are being met. Annual audits produce comprehensive reports that highlight any areas of concern or non-compliance, allowing plan sponsors to address issues proactively. This process includes verifying that contributions are made timely, benefits are paid correctly and on schedule, and that all required disclosures are made to participants in accordance with regulatory requirements. Other options, such as participant surveys, while valuable for understanding participant needs and satisfaction, do not directly assess compliance with regulations. Retirement account reviews and monthly financial tracking have their importance in monitoring the plan's performance and ensuring ongoing fiduciary oversight, but they are not specifically focused on regulatory compliance in the same manner an annual audit is.