Practice Test Geeks(CPM) Certified Payroll Manager Practice Test
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Benefits Enrollment & Deductions Flashcards

7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Benefits Enrollment & Deductions flashcards as text

  1. An employee misses open enrollment and wants to add a dependent. Under what circumstance can they enroll outside of open enrollment?

    Answer: They experience a qualifying life event such as marriage or birth

    A qualifying life event (QLE) such as marriage, divorce, birth, or adoption triggers a special enrollment period outside of open enrollment.

  2. Which pre-tax benefit deduction is governed by Section 125 of the Internal Revenue Code?

    Answer: Cafeteria plan deductions

    Section 125 of the IRC governs cafeteria plans, allowing employees to pay for eligible benefits with pre-tax dollars.

  3. When an employee elects a Health FSA of $2,400 for the plan year, how much is available on Day 1 of the plan year?

    Answer: $2,400 (the full annual election)

    Health FSA funds are available in full at the start of the plan year regardless of how much the employee has contributed so far — this is the uniform coverage rule.

  4. A Dependent Care FSA annual limit for a married couple filing jointly in 2024 is:

    Answer: $5,000

    The IRS limits Dependent Care FSA contributions to $5,000 per year for married couples filing jointly or single filers.

  5. An employee elects employee-only medical coverage mid-year after a divorce. The payroll deduction should change to reflect:

    Answer: The employee-only premium rate effective the first of the next month

    After a qualifying life event, benefit elections and corresponding payroll deductions typically change effective the first of the month following the event or the event date, per plan rules.

  6. Which of the following employer-paid benefits is included in an employee's W-2 Box 12 with Code DD?

    Answer: Cost of employer-sponsored health coverage

    Code DD in Box 12 of Form W-2 reports the cost of employer-sponsored health coverage, which is informational and not taxable to the employee.

  7. What is the primary purpose of a Summary Plan Description (SPD) in benefits administration?

    Answer: To inform participants of their rights and benefits under an ERISA plan

    ERISA requires plan administrators to provide an SPD that clearly explains plan benefits, eligibility, and participant rights.