Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

In a target benefit plan, older participants receive faster funding because the plan is designed to ensure that each participant has a target benefit at retirement that corresponds to their age and the expected time until they retire. Since older participants have less time until retirement compared to younger participants, the contributions allocated to them are typically made at a higher rate to ensure they can accumulate sufficient assets in their accounts to meet their retirement goals.

This structure is intended to balance the funding levels across different age groups, taking into account the urgency of meeting retirement benefits for those closer to retirement age. As time progresses, the contributions for younger participants are usually lower, as they have more years to accumulate savings. This makes it essential for older participants to receive the accelerated funding necessary to reach their defined targets within a shorter timeframe.

The other statements do not accurately reflect how target benefit plans operate. Contributions are not distributed evenly since age and proximity to retirement influence funding levels, employers do not arbitrarily decide contribution limits as these are often determined by plan provisions and regulations, and the notion that younger participants receive higher contributions is contrary to the plan's intended purpose of accelerating funding for those closer to retirement.