Enmgy E-00075-15-o Series4 Ethics - 1 Cpe Hour For A Score Of At Least 70%

1.

In a Code of Ethics, Competence and Qualification Standards can be interpreted by practitioners to mean that when they are faced with a decision to take on a new area of client services, professionals have the choice of either getting up to speed through education and training or turning down the opportunity.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
In a Code of Ethics, Competence and Qualification Standards imply that professionals should have the necessary skills and knowledge to provide quality client services. This means that when faced with a decision to take on a new area of client services, practitioners should either acquire the required education and training to become competent in that area or decline the opportunity if they are not adequately qualified. This ensures that professionals prioritize their clients' best interests and maintain a high standard of service. Therefore, the given answer "True" accurately reflects the interpretation of Competence and Qualification Standards in a Code of Ethics.

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2.

It is legitimate for a governmental plan to provide for 10-year cliff vesting.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A 10-year cliff vesting period in a governmental plan means that employees must work for 10 years before becoming fully vested in their retirement benefits. This is a legitimate provision because it allows the government to incentivize long-term employment and loyalty among its employees. By requiring a significant amount of time before full vesting, the government can ensure that employees are committed to their positions and have a vested interest in the success of the organization. Additionally, it provides stability and continuity in the workforce, which is beneficial for the government's operations.

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3.

When an individual is participating in both a 403(b) plan and a 457(b) governmental plan, it is theoretically possible that the participant can make salary deferrals up to the annual 402(g) limit in each of those plans.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When an individual is participating in both a 403(b) plan and a 457(b) governmental plan, they are eligible to make salary deferrals up to the annual 402(g) limit in each of those plans. This means that they can contribute the maximum amount allowed by the IRS to both plans, maximizing their retirement savings potential.

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4.

There is a potential ethical issue when a practitioner is dealing with a transfer of records request from a client who has not paid outstanding invoices.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a practitioner is dealing with a transfer of records request from a client who has not paid outstanding invoices, there is a potential ethical issue. This is because withholding or delaying the transfer of records as a means to collect payment goes against the principle of client confidentiality and could be seen as a breach of professional ethics. It is important for practitioners to separate financial matters from their duty to maintain client confidentiality and ensure the smooth transfer of records when requested by the client.

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5.

In a Code of Ethics, clauses about Professional Integrity are designed to ensure that Professional Services are performed with honesty, integrity, skill, and care.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The explanation for the given correct answer is that clauses about Professional Integrity in a Code of Ethics are included to guarantee that Professional Services are carried out with honesty, integrity, skill, and care. These clauses serve as a guideline for professionals to maintain high ethical standards in their work and interactions with clients or customers. By adhering to these principles, professionals can establish trust, credibility, and a positive reputation in their respective fields.

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6.

When a TPA firm has a recent takeover case that becomes the subject of an IRS audit, it may be a good idea to send a heads up notification to the prior service provider to indicate that an audit is taking place with respect to plan years for which they provided plan services.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a TPA firm is undergoing an IRS audit for a recent takeover case, it is advisable to notify the prior service provider about the audit. This notification serves as a heads up to inform them that the audit is specifically related to the plan years in which they provided their services. By sending this notification, the TPA firm can ensure transparency and provide an opportunity for the prior service provider to address any potential concerns or provide relevant information to assist with the audit process.

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7.

When a TPA firm has a recent takeover case that becomes the subject of an IRS audit when it is known that there are compliance defects, the new TPA firm may want to decline handling the IRS audit in favor of making a recommendation that the employer assign Power of Attorney to a reputable ERISA attorney.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
In this scenario, it is true that the new TPA firm may want to decline handling the IRS audit. This is because they are aware of compliance defects in the recent takeover case, which could potentially lead to legal issues. Instead, they may suggest that the employer assign Power of Attorney to a reputable ERISA attorney who specializes in handling IRS audits. By doing so, the employer can ensure that they have expert legal representation to navigate the audit process and mitigate any potential penalties or liabilities.

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8.

When a qualified plan sponsor has received a notice that an IRS audit is going to take place, the window of opportunity to correct significant plan defects through VCP is closed.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a qualified plan sponsor has received a notice that an IRS audit is going to take place, it means that the IRS is going to review the plan for compliance with tax laws and regulations. During an audit, any significant plan defects that are discovered cannot be corrected through the Voluntary Correction Program (VCP). The VCP is a program offered by the IRS that allows plan sponsors to voluntarily correct certain plan failures to maintain the plan's tax-qualified status. Therefore, the statement that the window of opportunity to correct significant plan defects through VCP is closed when an IRS audit is going to take place is true.

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9.

When a qualified plan is under IRS audit, it is still possible for a Power of Attorney representative to disclose and work to resolve “insignificant” operational defects through negotiations with the IRS.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a qualified plan is under IRS audit, a Power of Attorney representative can disclose and work to resolve "insignificant" operational defects through negotiations with the IRS. This means that even during an audit, if the plan has minor issues, the representative can communicate with the IRS to address and resolve these defects without facing significant penalties or consequences.

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10.

In risk assessment, a client who is threatening to leave a service provider at a point when there are unresolved compliance issues is one of the worst case scenarios for potential liability that could arise down the line.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A client who is threatening to leave a service provider while there are unresolved compliance issues is considered one of the worst case scenarios for potential liability. This is because if the client does leave and the compliance issues are not resolved, it could lead to legal consequences and financial losses for the service provider. Therefore, it is important for the service provider to address and resolve compliance issues in order to mitigate potential liability.

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Enmgy E-00075-15-o Series4 Ethics - 1 Cpe Hour For A Score Of At Least 70%

It is legitimate for a governmental plan to provide for 10-year cliff vesting.

When an individual is participating in both a 403(b) plan and a 457(b) governmental plan, it is theoretically possible that the participant can make salary deferrals up to the annual 402(g) limit in each of those plans.

There is a potential ethical issue when a practitioner is dealing with a transfer of records request from a client who has not paid outstanding invoices.

In a Code of Ethics, clauses about Professional Integrity are designed to ensure that Professional Services are performed with honesty, integrity, skill, and care.

When a TPA firm has a recent takeover case that becomes the subject of an IRS audit, it may be a good idea to send a heads up notification to the prior service provider to indicate that an audit is taking place with respect to plan years for which they provided plan services.

When a qualified plan sponsor has received a notice that an IRS audit is going to take place, the window of opportunity to correct significant plan defects through VCP is closed.

When a qualified plan is under IRS audit, it is still possible for a Power of Attorney representative to disclose and work to resolve “insignificant” operational defects through negotiations with the IRS.

In risk assessment, a client who is threatening to leave a service provider at a point when there are unresolved compliance issues is one of the worst case scenarios for potential liability that could arise down the line.