Benefits and Compensation Flashcards
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Read the first 7 Benefits and Compensation flashcards as text
An employer provides an employee with a company car for both business and personal use. How is the personal use portion treated for payroll purposes?
Answer: Included in wages as a taxable fringe benefit
The fair market value of personal use of a company vehicle is includible in the employee's gross wages and subject to income tax and FICA withholding.
Which of the following correctly describes the taxation of employer contributions to a qualified 401(k) plan?
Answer: Excluded from both FICA and federal income tax wages when contributed
Employer matching or profit-sharing contributions to a qualified 401(k) plan are excluded from the employee's FICA and federal income tax wages at the time of contribution.
What is the Section 415 annual additions limit for defined contribution plans in 2024?
Answer: $69,000
The Section 415 limit on annual additions to defined contribution plans for 2024 is $69,000 (or 100% of compensation, if less).
An employee who is also a 5% owner of the company participates in the company's 401(k) plan. Under the required minimum distribution rules, when must distributions begin?
Answer: April 1 of the year following the year the employee turns 73
For 5% owners, RMDs must begin by April 1 following the year they reach age 73, regardless of whether they are still employed.
Under IRC Section 129, what is the annual maximum amount that can be excluded from an employee's income for employer-provided dependent care assistance?
Answer: $5,000 ($2,500 if married filing separately)
The annual exclusion for employer-provided dependent care assistance under Section 129 is $5,000 ($2,500 for married filing separately).
A company provides free parking to employees in a lot that costs $300 per month per spot. How is this benefit treated for tax purposes in 2024?
Answer: Excludable up to $315 per month; excess is taxable
The qualified parking exclusion for 2024 is $315 per month; amounts exceeding this limit must be included in the employee's taxable wages.
Which plan document must a qualified retirement plan have to describe the plan's terms and conditions, including eligibility, vesting, and benefit formulas?
Answer: Summary Plan Description (SPD)
The Summary Plan Description (SPD) is the primary document that communicates the plan's terms to participants and must be provided within 90 days of becoming a participant.