ADP Employee Benefits Administration 2 — Questions and Answers
Question 1: What ADP configuration step is required to ensure employer HSA contributions are excluded from FICA taxes?
- Set the employer HSA contribution as a non-taxable benefit code exempt from Social Security and Medicare (Correct answer)
- Mark the HSA as a post-tax deduction
- Enter the HSA in Box 14 of the W-2
- Include the HSA in the supplemental wage calculation
Correct answer: Set the employer HSA contribution as a non-taxable benefit code exempt from Social Security and Medicare
Employer HSA contributions must be coded as non-taxable in ADP so they are excluded from FICA (Social Security and Medicare) withholding.
Question 2: Which ADP tool allows employees to view their benefits elections, change voluntary deductions, and update beneficiaries?
- ADP Employee Self-Service (ESS) (Correct answer)
- ADP SmartCompliance
- ADP Workforce Now Admin Panel
- ADP TotalPay Portal
Correct answer: ADP Employee Self-Service (ESS)
ADP Employee Self-Service allows employees to independently manage benefits elections, beneficiary designations, and voluntary payroll deductions.
Question 3: What does 'benefits in kind' mean in the context of ADP payroll and why does it matter?
- Non-cash compensation (like a company car) that must be valued and added to taxable wages (Correct answer)
- A type of employer match in a 401(k) plan
- A cash bonus paid in lieu of a benefit
- An exempt fringe benefit under Section 132
Correct answer: Non-cash compensation (like a company car) that must be valued and added to taxable wages
Benefits in kind are non-cash perks that have taxable value; ADP requires their fair market value to be added to gross wages for proper tax withholding.
Question 4: In ADP, when an employee elects a dependent care FSA, what is the 2024 IRS contribution limit for a married couple filing jointly?
- $5,000 (Correct answer)
- $10,500
- $3,200
- $2,500
Correct answer: $5,000
The IRS limits dependent care FSA contributions to $5,000 per year for married couples filing jointly (or a single taxpayer).
Question 5: Which ADP report confirms that an employee's year-to-date benefit deductions match their benefit elections on file?
- Benefits Enrollment vs. Deductions Reconciliation Report (Correct answer)
- W-2 Preview Report
- Payroll Summary Report
- Labor Distribution Report
Correct answer: Benefits Enrollment vs. Deductions Reconciliation Report
The Benefits Enrollment vs. Deductions Reconciliation Report in ADP compares what was elected during enrollment against what was actually deducted from payroll.
Question 6: What is the ADP-recommended process to handle a benefits deduction that was missed due to a payroll error?
- Process a retroactive adjustment in the next pay period after confirming the employee's written consent if the amount exceeds normal deduction limits (Correct answer)
- Re-run the entire payroll for the affected period
- Ignore the missed deduction and notify the carrier
- Reduce the employee's next bonus by the missed amount
Correct answer: Process a retroactive adjustment in the next pay period after confirming the employee's written consent if the amount exceeds normal deduction limits
ADP recommends processing a retroactive catch-up deduction in the next available payroll cycle, ensuring compliance with applicable state wage deduction laws and employee consent requirements.
ADP Employee Benefits Administration 2
What ADP configuration step is required to ensure employer HSA contributions are excluded from FICA taxes?