CEBS Tax & Legal Considerations for Benefits Flashcards

Which penalty applies to an employer that fails to file Form 5500 for an ERISA-covered plan by the due date?

Answer: $250 per day up to $150,000 maximum

The IRS may assess a penalty of $250 per day (up to $150,000) for late filing of Form 5500, while the DOL has a separate penalty structure under its DFVC program.

What is the 'highly compensated employee' (HCE) threshold used in benefits nondiscrimination testing under IRC Section 414(q)?

Answer: $135,000 in prior year compensation

For 2024, an HCE is generally defined as an employee who earned more than $135,000 in the prior year (indexed for inflation), or a 5% owner at any time.

Under the Mental Health Parity and Addiction Equity Act (MHPAEA), what are group health plans prohibited from doing?

Answer: Applying more restrictive financial requirements or treatment limits to mental health benefits than to medical/surgical benefits

MHPAEA prohibits group health plans that offer mental health and substance use disorder benefits from applying more restrictive quantitative or nonquantitative treatment limits compared to medical/surgical benefits.

What is 'imputed income' in the context of employee benefits?

Answer: The cash value of non-cash benefits that must be included in an employee's taxable wages

Imputed income refers to the fair market value of non-cash benefits or perks that the IRS requires to be added to an employee's taxable compensation.

Which exemption allows certain religious organizations and small employers to avoid ACA contraceptive mandate requirements?

Answer: Religious and moral exemption

The ACA's contraceptive mandate exemption allows qualifying religious and non-profit organizations with sincere religious or moral objections to opt out of providing contraceptive coverage.

Under ERISA Section 404, which standard governs the conduct of a plan fiduciary?

Answer: Prudent man standard

ERISA Section 404 requires fiduciaries to act with the care, skill, prudence, and diligence of a prudent man acting under similar circumstances, commonly called the prudent man (or prudent expert) standard.