Benefits and Compensation Flashcards
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Read the first 7 Benefits and Compensation flashcards as text
When calculating overtime for a non-exempt employee who receives a non-discretionary production bonus, how must the bonus be treated?
Answer: Included in the regular rate of pay for the workweek(s) to which the bonus applies
Non-discretionary bonuses must be included in the regular rate of pay for overtime calculation purposes, which may require retroactive overtime adjustments.
Under the IRS accountable plan rules, which condition must be met for employee expense reimbursements to be excluded from taxable wages?
Answer: Employees must have a business connection, adequate accounting, and return excess advances within a reasonable time
An accountable plan requires: a business connection for the expense, adequate accounting of expenses with receipts, and return of any excess advances within a reasonable time.
What is the maximum amount of group-term life insurance an employer can provide to an employee on a tax-free basis?
Answer: $50,000
Under IRC Section 79, the cost of up to $50,000 of employer-provided group-term life insurance is excludable from the employee's gross income.
An employee receives a $10,000 moving expense reimbursement from their employer after relocating for a new position. Under current tax law (post-TCJA), how is this treated?
Answer: Fully included in the employee's taxable wages
Under the Tax Cuts and Jobs Act (TCJA), employer-provided moving expense reimbursements are included in taxable wages for all employees except active-duty military through 2025.
A Roth 401(k) deferral differs from a traditional pre-tax 401(k) deferral in what fundamental way?
Answer: Roth 401(k) contributions are made after-tax and qualified distributions are tax-free; traditional contributions are pre-tax
Roth 401(k) deferrals are made with after-tax dollars and subject to federal income tax withholding, but qualified distributions in retirement are tax-free.
Which of the following fringe benefits is classified as a 'no-additional-cost service' and excludable from employee wages?
Answer: Free airline travel provided by an airline to its employees on space-available flights
No-additional-cost services are services the employer provides to employees in the same line of business with no substantial additional cost, such as free standby airline flights.
Under the nondiscrimination rules for Section 125 cafeteria plans, the plan cannot discriminate in favor of which group of employees?
Answer: Highly compensated employees and key employees
Section 125 plans must not discriminate in favor of highly compensated employees (HCEs) or key employees with respect to eligibility, benefits, or contributions.