Exempt Compensation

Question 0

What are the two most common types of exempt compensations?

Answer 0

1. Employee 401 (k) contributions

2. Contributions to a section 125 premium only plan (POP)

Question 1

What are exclusion or exemptions

Answer 1

Employee compensation they are excluded from being taxed

Question 2

What are 401 (k) plans

Answer 2

Contribute a portion of their wages toward a 401 (k) retirement plan. These continuations are deducted on a pretax basis, that are not reflected as a taxable income, so they are exempt

Question 3

401 (k) plans are exempt from?

Answer 3

1. Federal income tax (FIT) and

2. State income tax (SIT)

Question 4

What is section 125 (POP) plans

Answer 4

Aka cafeteria plan; the most basic option of the employee benefits program. It allows qualified employees to make pretax contributions toward their health coverage. It may also include dental, vision, group life insurance, group disability, and other group term life insurance

Question 5

Insurance contributions

Answer 5

Also deducted on a pretax basis, Contribution las to these plans are exempt from:

1. All federal taxes (FICA, federal income tax, and FUTA)
2. Most state income tax, and
3. State unemployment taxes (in some state)