CPM Cheat Sheet 2026

The 30 highest-yield CPM facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is a Roth 401(k) contribution? → An after-tax employee contribution that grows tax-free with qualified tax-free withdrawals
2. Under a qualified Employee Stock Purchase Plan (ESPP) that meets Section 423 requirements, the maximum discount that may be offered to employees is: → 15%
3. For Incentive Stock Options (ISOs), which item is a preference item for Alternative Minimum Tax (AMT) purposes in the year of exercise? → The spread between the exercise price and FMV at exercise
4. What is included in gross pay? → Base salary, bonuses, and overtime pay.
5. Which law governs the minimum standards for most voluntarily established retirement plans in private industry? → ERISA
6. A CPM professional encounters an unfamiliar situation while performing federal & state tax withholding duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
7. A CPM professional encounters an unfamiliar situation while performing payroll audit & sox controls duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
8. How can payroll systems improve tax compliance? → By automating tax calculations and generating accurate reports.
9. What is the primary ethical obligation of a CPM professional when a conflict of interest arises during multi-state nexus & reciprocity activities? → Disclose the conflict to all relevant parties and recuse from the decision if necessary
10. What is a SIMPLE IRA plan, and which employers are eligible? → A Savings Incentive Match Plan for Employees; employers with 100 or fewer employees
11. What is the primary ethical obligation of a CPM professional when a conflict of interest arises during worker classification & abc test activities? → Disclose the conflict to all relevant parties and recuse from the decision if necessary
12. What does the term 'vesting schedule' refer to in a 401(k) plan? → The timeline over which employer contributions become the employee's permanent property
13. What are the tax withholding requirements for employers? → Employers must withhold federal income tax and FICA taxes (Social Security and Medicare).
14. Section 409A of the Internal Revenue Code primarily governs: → Nonqualified deferred compensation (NQDC) arrangements
15. When RSUs vest and shares are delivered to the employee, the employer is required to withhold: → Federal income tax, Social Security, and Medicare taxes
16. What is the importance of employee classification in payroll? → To determine wage rates and eligibility for overtime.
17. A CPM professional encounters an unfamiliar situation while performing multi-state nexus & reciprocity duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
18. What is the main purpose of payroll accounting? → To ensure correct calculation and reporting of wages and taxes.
19. Which government agency is responsible for administering payroll taxes? → Internal Revenue Service (IRS).
20. A CPM professional encounters an unfamiliar situation while performing benefits enrollment & deductions duties. What is the most appropriate first action? → Consult relevant standards, guidelines, or a qualified supervisor before proceeding
21. What is an 'automatic enrollment' feature in a 401(k) plan? → All employees are automatically enrolled unless they opt out
22. Under IRC Section 83(b), an employee who receives restricted stock (not RSUs) may elect to: → Recognize income at the grant date based on current FMV rather than waiting until vesting
23. What are general ledger accounts used for in payroll accounting? → To track and categorize payroll expenses and liabilities.
24. What is the primary ethical obligation of a CPM professional when a conflict of interest arises during benefits enrollment & deductions activities? → Disclose the conflict to all relevant parties and recuse from the decision if necessary
25. Which quality assurance method is most commonly applied in flsa overtime & exemption rules to verify that CPM professional standards are being met? → Structured audits, peer reviews, and performance metrics aligned with industry benchmarks
26. What is the FICA tax? → A tax paid by both employees and employers for Social Security and Medicare.
27. What is the primary ethical obligation of a CPM professional when a conflict of interest arises during payroll audit & sox controls activities? → Disclose the conflict to all relevant parties and recuse from the decision if necessary
28. What is a key feature of modern payroll systems? → They automate tax calculations and integrate compliance reports.
29. How can payroll technology improve employee self-service? → By providing employees with access to their payroll data and tax documents.
30. Why is it important to integrate payroll systems with other business systems? → To ensure data consistency and reduce manual entry.