Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

In the context of qualified plan distributions, a lump sum distribution is defined by specific criteria related to the duration of participation in the plan. For a distribution to qualify as a lump sum, the requirement that the participant must have been an active plan participant for a minimum of five years is significant because it indicates a commitment to the plan that allows for a larger, singular distribution of benefits. This ensures that the participant has had sufficient time to accumulate benefits within the plan.

The other options do not align with the key requirements for a lump sum distribution. For example, age alone does not dictate whether a distribution is categorized as a lump sum, as participants can receive lump sum distributions before reaching 65 years old. Likewise, simply contributing for one year or the status of having loans does not impact the classification of the distribution itself. The essential focus on the five years signifies a matured participation status within the plan, thus qualifying the distribution as a lump sum.