CPC Employee Benefits Law & Regulatory Updates 3 — Questions and Answers
Question 1: Under IRC Section 415, what is the 2024 annual addition limit for defined contribution plans?
- $69,000 (Correct answer)
- $66,000
- $73,500
- $61,000
Correct answer: $69,000
For 2024, IRC Section 415(c) limits total annual additions to defined contribution plans to $69,000 (or 100% of compensation if less).
Question 2: Which ERISA provision requires plans to provide a summary of material modifications (SMM) within how many days after the end of the plan year in which a material change was adopted?
- 210 days (Correct answer)
- 60 days
- 90 days
- 120 days
Correct answer: 210 days
Under ERISA Section 104(b)(1), an SMM must be furnished within 210 days after the end of the plan year in which the material modification was made.
Question 3: A 401(k) plan sponsor wants to add an auto-escalation feature that automatically increases deferral rates. Which safe harbor under ERISA exempts this from the prohibited transaction rules relating to plan expenses?
- Qualified Automatic Contribution Arrangement (QACA) safe harbor (Correct answer)
- ERISA Section 404(c) safe harbor
- ADP/ACP safe harbor
- ERISA Section 408(b)(2) safe harbor
Correct answer: Qualified Automatic Contribution Arrangement (QACA) safe harbor
A QACA provides a safe harbor from ADP/ACP testing and requires auto-enrollment with auto-escalation, starting at a minimum 3% deferral rate increasing to at least 6%.
Question 4: Which federal law extended COBRA continuation coverage from 18 months to up to 36 months for qualified beneficiaries who experience a second qualifying event during the initial 18-month period?
- ERISA Section 602 (Correct answer)
- HIPAA
- ACA Section 1001
- OBRA 1986
Correct answer: ERISA Section 602
ERISA Section 602 provides that a second qualifying event (such as death or divorce) during the initial 18-month COBRA period extends coverage up to 36 months from the original qualifying event.
Question 5: Under the ACA's employer shared responsibility provisions, applicable large employers (ALEs) with 50 or more full-time equivalents must offer minimum essential coverage to what percentage of full-time employees to avoid the Section 4980H(a) penalty?
- 95% (Correct answer)
- 70%
- 100%
- 80%
Correct answer: 95%
Under IRC Section 4980H(a), ALEs must offer minimum essential coverage to at least 95% of full-time employees (and their dependents) to avoid the employer mandate penalty.
Question 6: Under SECURE 2.0, Roth contributions to SIMPLE and SEP IRAs became permissible beginning in which year?
- 2023 (Correct answer)
- 2024
- 2025
- 2026
Correct answer: 2023
SECURE 2.0 Section 601 permitted employer plans to offer Roth contributions to SIMPLE IRAs and SEP IRAs effective for tax years beginning after December 29, 2022 (i.e., 2023).
Question 7: Which prohibited transaction exemption (PTE) permits a plan fiduciary to receive compensation for investment advice if it meets best interest, impartial conduct, and disclosure standards?
- PTE 2020-02 (Correct answer)
- PTE 84-24
- PTE 75-1
- PTE 96-23
Correct answer: PTE 2020-02
PTE 2020-02 (Improving Investment Advice for Workers & Retirees) allows fiduciaries to receive otherwise-prohibited compensation if they satisfy impartial conduct standards and provide required disclosures.
CPC Employee Benefits Law & Regulatory Updates 3
Under IRC Section 415, what is the 2024 annual addition limit for defined contribution plans?