APA Benefits and Compensation 3

Question 1

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?

Accepted Answer

Included in wages as a taxable fringe benefit

Answer

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.

Question 2

Which of the following correctly describes the taxation of employer contributions to a qualified 401(k) plan?

Accepted Answer

Excluded from both FICA and federal income tax wages when contributed

Answer

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.

Question 3

What is the Section 415 annual additions limit for defined contribution plans in 2024?

Accepted Answer

$69,000

Answer

The Section 415 limit on annual additions to defined contribution plans for 2024 is $69,000 (or 100% of compensation, if less).

Question 4

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?

Accepted Answer

April 1 of the year following the year the employee turns 73

Answer

For 5% owners, RMDs must begin by April 1 following the year they reach age 73, regardless of whether they are still employed.

Question 5

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?

Accepted Answer

$5,000 ($2,500 if married filing separately)

Answer

The annual exclusion for employer-provided dependent care assistance under Section 129 is $5,000 ($2,500 for married filing separately).

(APA) American Payroll Association Certification Practice Test

(APA) American Payroll Association Certification Practice Test

APA Benefits and Compensation 3