CPP CPP Advanced Practice 3 — Questions and Answers
Question 1: An employee contributes $23,000 to their 401(k) plan in 2024 and is age 52. What is the maximum additional catch-up contribution they may make?
- $3,500
- $7,500 (Correct answer)
- $11,250
- $15,000
Correct answer: $7,500
For 2024, employees age 50 or older may make an additional $7,500 catch-up contribution to a 401(k) plan beyond the $23,000 base limit.
Question 2: Which form must an employer file to correct an error discovered on a previously filed Form 941?
- Form 941-X (Correct answer)
- Form 843
- Form 1040-X
- Form W-2c
Correct answer: Form 941-X
Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) is used to correct errors on a previously filed Form 941.
Question 3: Under the FLSA, which of the following employees is properly classified as exempt under the executive exemption?
- A team leader who earns $35,000 annually and directs 3 employees
- A manager earning $684/week who customarily directs 2 or more employees and has hiring authority (Correct answer)
- A supervisor earning $600/week who occasionally interviews candidates
- A senior worker earning $900/week who trains new hires but has no hiring input
Correct answer: A manager earning $684/week who customarily directs 2 or more employees and has hiring authority
The executive exemption requires: salary of at least $684/week, primary duty of managing, directing 2+ employees, and authority to hire/fire or significant influence over those decisions.
Question 4: An employee's garnishment order is for $400 per week. Their disposable earnings are $700. Under federal CCPA rules, what is the maximum that can be garnished?
- $175 (Correct answer)
- $200
- $225
- $400
Correct answer: $175
The CCPA limits garnishment to the lesser of 25% of disposable earnings or the amount exceeding 30 times the federal minimum wage ($7.25 × 30 = $217.50); 25% of $700 = $175.
Question 5: What is the Social Security wage base for 2024?
- $147,000
- $160,200
- $168,600 (Correct answer)
- $176,100
Correct answer: $168,600
The Social Security taxable wage base for 2024 is $168,600; earnings above this amount are not subject to the 6.2% Social Security tax.
Question 6: Which IRS safe harbor allows employers to avoid the trust fund recovery penalty when a payroll deposit error is de minimis?
- The deposit must be made within 2 days of the due date
- The shortfall must not exceed the greater of $100 or 2% of the required deposit (Correct answer)
- The employer must have a clean deposit history for 24 months
- The underpayment must be corrected within the same quarter
Correct answer: The shortfall must not exceed the greater of $100 or 2% of the required deposit
The de minimis rule allows a deposit shortfall of up to the greater of $100 or 2% of the required deposit without penalty, provided it is made up by a specific date.
Question 7: A company acquires another business mid-year and chooses to treat the transaction as a successor employer for payroll tax purposes. What is the primary benefit?
- The successor can skip Form 941 filing for the acquisition quarter
- Employees' wages from the predecessor count toward FICA and FUTA wage bases for the year (Correct answer)
- The successor inherits the predecessor's FUTA tax rate immediately
- Predecessor employees are treated as new hires for withholding purposes
Correct answer: Employees' wages from the predecessor count toward FICA and FUTA wage bases for the year
Successor employer treatment allows the acquiring company to include predecessor wages when calculating FICA and FUTA wage base limits, preventing employees from being taxed twice on amounts already taxed.
CPP CPP Advanced Practice 3
An employee contributes $23,000 to their 401(k) plan in 2024 and is age 52.
What is the maximum additional catch-up contribution they may make?