CPP Benefits Administration 3 — Questions and Answers
Question 1: What is the maximum annual benefit exclusion for employer-provided dependent care assistance under IRC Section 129?
- $2,500 for married filing separately (Correct answer)
- $5,000 for married filing jointly
- $3,000 for single filers
- $7,500 for all filers
Correct answer: $2,500 for married filing separately
Married employees filing separately may exclude up to $2,500; married filing jointly and single filers may exclude up to $5,000.
Question 2: Which form must employers use to report ACA health coverage information to the IRS for applicable large employers?
- Form 1094-B and 1095-B
- Form 1094-C and 1095-C (Correct answer)
- Form 5500
- Form W-2 with Code DD
Correct answer: Form 1094-C and 1095-C
ALEs use Forms 1094-C (transmittal) and 1095-C (employee statement) to report employer-sponsored health coverage to the IRS.
Question 3: An employee's group term life insurance coverage is $120,000. The employee is age 47. What amount is included in the employee's gross income?
- The entire premium paid by the employer
- The cost of coverage exceeding $50,000 using IRS Table I rates (Correct answer)
- $70,000 times the employee's age factor
- Nothing, all group term life is excluded
Correct answer: The cost of coverage exceeding $50,000 using IRS Table I rates
Coverage above $50,000 results in income inclusion calculated using IRS Table I uniform premium rates based on the employee's age.
Question 4: Under ERISA, what is the maximum vesting period allowed for employer contributions under a cliff vesting schedule in a qualified retirement plan?
- 3 years (Correct answer)
- 5 years
- 6 years
- 7 years
Correct answer: 3 years
ERISA requires that cliff vesting for employer contributions occur no later than 3 years of service for plans subject to current vesting rules.
Question 5: Which of the following is a qualifying event that triggers COBRA continuation coverage for a spouse?
- Employee's voluntary reduction in hours below 30 per week
- Divorce or legal separation from the covered employee (Correct answer)
- Employee's transfer to a different state
- Spouse's change in employment status
Correct answer: Divorce or legal separation from the covered employee
Divorce or legal separation from the covered employee is a COBRA qualifying event that allows the spouse to elect continuation coverage.
Question 6: What W-2 box and code is used to report the cost of employer-sponsored health coverage?
- Box 12, Code W
- Box 12, Code DD (Correct answer)
- Box 14, with description
- Box 12, Code D
Correct answer: Box 12, Code DD
The aggregate cost of employer-sponsored health coverage must be reported in Box 12 using Code DD on Form W-2.
Question 7: A Flexible Spending Account (FSA) grace period provision allows participants to use funds remaining at year-end for how long after the plan year ends?
- 30 days
- 60 days
- 2.5 months (Correct answer)
- 3 months
Correct answer: 2.5 months
The FSA grace period option allows up to 2.5 months after the plan year ends to incur expenses using prior-year funds.
CPP Benefits Administration 3
What is the maximum annual benefit exclusion for employer-provided dependent care assistance under IRC Section 129?