Mixed Deck — All CEBS Topics Flashcards

An 'excess benefit plan' under ERISA is a nonqualified plan established to:

Answer: Restore qualified plan benefits limited by Section 415 or Section 401(a)(17) caps

An excess benefit plan is a top-hat plan that provides the benefit an executive would have received under the qualified plan but for the IRS limitations on contributions and benefits.

What is the best approach for a CEBS professional to manage organizational change?

Answer: Communicate clearly, involve stakeholders, and provide adequate training and support

Successful change management requires clear communication, stakeholder involvement, and providing adequate training and support to ensure smooth transitions.

What is a 'waiver of premium' provision in a group life or disability insurance policy?

Answer: Premiums are waived (not owed) while the insured is totally disabled

A waiver of premium provision keeps the life or disability policy in force without requiring premium payments while the insured is totally disabled, as defined by the policy.

Which IRS code section governs nonqualified deferred compensation plans and imposes strict rules on deferral elections and distributions?

Answer: Section 409A

Section 409A governs nonqualified deferred compensation, requiring initial deferral elections before compensation is earned and limiting permissible distribution events.

Under COBRA, how long must continuation coverage generally be offered to a covered employee who is terminated (for reasons other than gross misconduct)?

Answer: 18 months

COBRA requires that employers with 20 or more employees offer 18 months of continuation coverage to employees who lose coverage due to termination or reduction in hours.

An Incentive Stock Option (ISO) differs from a Nonstatutory Stock Option (NSO) primarily in that:

Answer: ISOs must be exercised within 10 years and may generate preferential AMT treatment

ISOs receive preferential tax treatment—no ordinary income tax at exercise—but the spread at exercise is an AMT preference item and must meet strict holding period requirements.

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.

Which challenge is MOST commonly encountered when implementing financial analysis & budgeting in Certified Employee Benefits Specialist?

Answer: Resistance to change and insufficient training or resources

Resistance to change and insufficient training or resources are the most common barriers to successful implementation, requiring proactive change management strategies.

In group disability plans, what does the term 'own-occupation to any-occupation conversion' mean?

Answer: The disability definition changes from own-occupation to any-occupation after a specified benefit period (commonly 24 months)

Many LTD policies use an own-occupation definition for the first 24 months of disability, then switch to the stricter any-occupation definition, which may result in termination of benefits for partially recovered claimants.

What is the primary difference between defined benefit and defined contribution pension plans?

Answer: A defined benefit plan offers a guaranteed retirement benefit, while a defined contribution plan depends on contributions and investment performance.

The primary difference between defined benefit and defined contribution pension plans lies in who bears the investment risk and how the retirement benefit is determined. A defined benefit plan promises a specific, guaranteed retirement income, often based on salary and years of service, with the employer bearing the investment risk. In contrast, a defined contribution plan, like a 401(k), involves regular contributions, but the final retirement benefit depends entirely on the investment performance of those contributions, with the employee bearing the investment risk.

A Flexible Spending Account (FSA) under IRC Section 125 is subject to the 'use-it-or-lose-it' rule. What is the maximum carryover amount allowed under IRS guidance (as of recent updates)?

Answer: $610

The IRS allows employers to permit FSA participants to carry over up to $610 (indexed for inflation) of unused health FSA funds into the following plan year.

Under the ACA, what is the employer shared responsibility ('pay or play') rule threshold for applicable large employers (ALEs)?

Answer: 50 or more full-time equivalent employees

Employers with 50 or more full-time equivalent employees are considered ALEs and must offer affordable, minimum-value health coverage or potentially face excise tax penalties.

A phantom stock plan provides executives with:

Answer: A cash or stock payment equal to the value of a specified number of hypothetical shares

Phantom stock plans credit executives with hypothetical share units that track the company's stock price, paying out cash or actual shares based on the appreciated value without issuing real equity.

How do employers measure the effectiveness of wellness programs?

Answer: By tracking employee feedback, participation rates, and health cost reductions.

Measuring the effectiveness of wellness programs requires a multi-faceted approach to understand their true impact. Tracking employee feedback and participation rates indicates engagement and satisfaction with the programs offered. Crucially, monitoring reductions in health costs, such as fewer claims or lower insurance premiums, provides tangible evidence of the program's financial benefits and success in improving employee health.

Which of the following is the primary disadvantage of a secular trust compared to a rabbi trust for nonqualified deferred compensation?

Answer: The executive is taxed on contributions when they are made to the secular trust

Contributions to a secular trust are immediately taxable to the executive because assets are beyond the reach of the employer's creditors, triggering constructive receipt.

Which element is MOST critical to successful decision-making in Certified Employee Benefits Specialist?

Answer: Gathering and analyzing relevant data before making informed decisions

Data-driven decision-making, which involves gathering and analyzing relevant information, leads to more informed and effective decisions in professional practice.

In the context of Certified Employee Benefits Specialist, which of the following is the PRIMARY purpose of safety compliance programs?

Answer: To minimize workplace hazards and protect personnel

Safety compliance programs are primarily designed to minimize workplace hazards and protect the health and safety of all personnel involved.

Under the economic benefit doctrine applicable to nonqualified plans, an executive is taxed when:

Answer: The executive receives a transfer of property or an economic benefit with ascertainable value

The economic benefit doctrine taxes the executive when a taxable economic benefit of ascertainable value is conferred, even if no cash is received, such as when assets are placed in a secular trust.

In Certified Employee Benefits Specialist practice, what is the PRIMARY purpose of performance metrics?

Answer: To measure progress toward goals and identify areas for improvement

Performance metrics are primarily used to measure progress toward established goals and identify areas where improvement is needed to enhance overall performance.

Which of the following is an example of a legally required benefit?

Answer: Social Security and unemployment insurance.

Legally required benefits are those that employers are mandated by federal or state law to provide to their employees. Social Security and unemployment insurance are prime examples of such benefits. Social Security provides retirement, disability, and survivor benefits, while unemployment insurance offers temporary financial assistance to eligible workers who lose their jobs through no fault of their own, forming a crucial social safety net.