CPP Benefits Administration

Question 1

What is a Section 125 (cafeteria) plan?

Accepted Answer

A benefit plan allowing employees to choose from various pre-tax benefit options including health insurance and FSAs

Answer

Section 125 plans allow employees to pay for qualified benefits (health insurance premiums, FSAs, dependent care) with pre-tax dollars, reducing their taxable income.

Question 2

What is a Health Savings Account (HSA)?

Accepted Answer

A tax-advantaged savings account paired with a high-deductible health plan for medical expenses

Answer

An HSA is a tax-advantaged account available to individuals enrolled in high-deductible health plans, offering triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Question 3

What is COBRA continuation coverage?

Accepted Answer

A federal law requiring employers with 20+ employees to offer continued health coverage to employees who lose their jobs

Answer

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows employees and dependents to continue group health coverage for 18-36 months after qualifying events like job loss, though they pay the full premium.

Question 4

What is the employer's responsibility regarding 401(k) plan administration?

Accepted Answer

Timely deposit of employee contributions, compliance with plan documents, and annual reporting/testing

Answer

Employers must timely deposit employee contributions (generally within 7 business days), follow plan documents, perform annual non-discrimination testing, file Form 5500, and provide required notices.

Question 5

What is imputed income for tax purposes?

Accepted Answer

The value of certain employer-provided benefits that must be included in taxable wages, such as group life insurance over $50,000

Answer

Imputed income is the taxable value of non-cash benefits or fringe benefits provided by an employer, such as the cost of group term life insurance coverage exceeding $50,000.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP Benefits Administration