Administration and Operations
What the exam expects
Operations questions test the day-to-day mechanics: payroll file handling, eligibility tracking, loan and distribution processing, reconciliation, and recordkeeping. You should understand the control environment - segregation of duties, reconciliation of trust assets to recordkeeper balances, and audit trails - and why each control exists. Know how data flows from payroll to the recordkeeper to the trustee and where errors typically enter.
Concepts to master
- Payroll file validation, contribution coding, and reconciliation to the trust.
- Eligibility and entry-date tracking, including rehires and break-in-service rules.
- Loan administration: limits, repayment, and default treatment.
- Distribution processing, spousal consent, and required minimum distributions.
- Year-end tasks: testing data, forfeiture reconciliation, and 1099-R reporting.
Traps
Questions often hinge on a data error with a downstream compliance effect: a missed deferral opportunity from a payroll coding mistake, or an eligibility error that becomes a coverage failure. Another trap is assuming the recordkeeper's balance is authoritative - the trust statement and the plan terms are the references. Watch for loan questions that ignore the interplay between the plan's limit and the statutory maximum, and for distribution questions that skip spousal consent or RMD timing.
Worked example
A new hire's deferral election is entered a pay period late. Rule of thumb: the missed deferral opportunity must be corrected, not merely started going forward. Calculate the missed deferrals, apply the appropriate corrective contribution and earnings, and document the root cause. Then ask whether the error affected other participants - one payroll mistake rarely affects only one person.