CPP MCQ 4 — Questions and Answers
Question 1: Under ERISA, a 401(k) plan must distribute elective deferrals made under a safe harbor plan to participants no later than:
- 30 days after year-end
- 45 days after year-end
- 60 days after the plan year closes
- By March 15 of the following year (Correct answer)
Correct answer: By March 15 of the following year
Excess contributions must be distributed by March 15 of the year following the plan year to avoid excise taxes under IRC Section 4979.
Question 2: Which form must an employer use to correct errors on previously filed Form 941?
- Form 941-X (Correct answer)
- Form 944-X
- Form W-2c
- Form 1099-C
Correct answer: Form 941-X
Form 941-X is the Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund used to correct errors on a previously filed Form 941.
Question 3: Under the ACA employer mandate, applicable large employers (ALEs) that fail to offer minimum essential coverage to at least 95% of full-time employees may be subject to a Shared Responsibility Payment under:
- IRC Section 4980H(a) (Correct answer)
- IRC Section 4980H(b)
- ERISA Section 502
- IRC Section 6721
Correct answer: IRC Section 4980H(a)
IRC Section 4980H(a) imposes the 'A' penalty on ALEs that fail to offer minimum essential coverage to at least 95% of their full-time employees and their dependents.
Question 4: An employee is paid $1,800 semimonthly. What is this employee's annualized salary?
- $21,600
- $43,200 (Correct answer)
- $46,800
- $93,600
Correct answer: $43,200
Semimonthly means 24 pay periods per year; $1,800 × 24 = $43,200 annualized salary.
Question 5: Which of the following payments is exempt from FUTA tax?
- Taxable fringe benefits
- Vacation pay
- Wages paid to a spouse employed by the other spouse (Correct answer)
- Severance pay
Correct answer: Wages paid to a spouse employed by the other spouse
Wages paid by one spouse to another in a non-corporate business setting are exempt from FUTA tax under IRC Section 3306(c)(5).
Question 6: The Social Security Administration requires employers to report employee wages on Form W-2 by:
- January 31 (Correct answer)
- February 28
- March 15
- April 15
Correct answer: January 31
Employers must furnish Form W-2 to employees and file copies with the SSA by January 31 of the year following the tax year.
Question 7: When processing a new hire's Form I-9, the employer must complete Section 2 within how many business days of the employee's first day of employment?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
Employers must complete Section 2 of Form I-9 within 3 business days of the employee's first day of employment.
CPP MCQ 4
Under ERISA, a 401(k) plan must distribute elective deferrals made under a safe harbor plan to participants no later than: