CPP Module 6

Question 1

Key employees for non-discrimination testing

Answer 1

1. corporate officers earning over $220k
2. 5% owners
3. 1% owners who’s prior year earnings were over $155k

Question 2

Dependent Care FSA Special Rules:

Answer 2

1. Is not subject to the uniform coverage rule.
2. Only reimbursed for expenses up to contribution amount
3. $5,000 non-taxable limit

Question 3

How are Section 125 Benefits Taxed?

Answer 3

Only benefits taken in cash are taxable

Question 4

How are Section 125 Benefits Taxed?

Answer 4

Nontaxable plan benefits are not reported on W-2 or 941.
Contributions are reported on Form 940.

Question 5

Medical FSA Contribution Limit

Answer 5

$3,200 per year

Question 6

What is a Cafeteria Plan?

Answer 6

Meetings Section 125 Requirements and allows employers to select a menu of non-taxable benefits to offer to employees.

Question 7

What is not allowed under a Section 125 Plan?

Answer 7

Compensation deferral from one plan year to another except for 401K plans

Question 8

What is an FSA Uniform Coverage Rule?

Answer 8

Employers must reimburse employee’s for eligible expenses up tp their annual election even if all contributions have not been made yet.

Question 9

Other term for a Section 125 Plan

Answer 9

Flexible benefit plan or flex plan

Question 10

Section 125 Discrimination Tests

Answer 10

Eligibility, contribution and benefits, and concentration test to demonstrate it does not favor in highly compensated employees.