Compensation & Benefits Administration Flashcards
7 cards from real CPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Compensation & Benefits Administration flashcards as text
A recruiter is counseling a candidate who received two job offers. Offer A has a higher base salary; Offer B has a lower base but includes equity, bonus, and superior benefits. What is the most professional approach?
Answer: Help the candidate calculate total compensation for both offers and align with their personal priorities
A CPC-certified consultant helps candidates evaluate total compensation holistically and aligned with their career and financial goals, not just base salary.
Which IRS tax rule limits the amount of annual additions (employer + employee contributions) that can be made to a defined contribution plan like a 401(k)?
Answer: Section 415 limit
IRS Section 415 sets the annual additions limit for defined contribution plans, capping the total of employer and employee contributions each year.
An employer's total compensation package includes base pay, variable pay, and benefits. Which category would employer-paid life insurance premiums fall under?
Answer: Indirect compensation / benefits
Employer-paid insurance premiums are classified as indirect compensation (benefits) because employees receive value but not a direct cash payment.
A candidate declines a job offer citing inadequate retirement benefits. Which of the following additions to the offer would most directly address this concern?
Answer: Adding a 401(k) with a 4% employer match
A 401(k) with employer match directly addresses the retirement benefits concern by providing tax-advantaged savings with additional employer contributions.
What is 'pay compression' in the context of compensation administration?
Answer: A situation where newer employees earn nearly as much as experienced employees in the same role
Pay compression occurs when market-driven increases for new hires erode the pay differential between longer-tenured employees and their newer colleagues.
Which benefit is typically excluded from an employee's gross income under IRS rules, making it a tax-free fringe benefit?
Answer: Employer-provided group term life insurance up to $50,000
Under IRS rules, employer-provided group term life insurance coverage up to $50,000 is excluded from an employee's gross income as a tax-free fringe benefit.
A staffing firm is placing a contractor at a client site for 18 months. To avoid IRS worker misclassification risk, which factor most strongly supports the contractor's independent status?
Answer: The contractor uses their own tools, sets their own hours, and controls their work methods
Behavioral and financial control tests under IRS guidelines look for contractor autonomy — using own tools, controlling methods, and setting hours are strong indicators of independent contractor status.