OCPS Employee Compensation & Benefits Administration 2 — Questions and Answers
Question 1: An employee's cafeteria plan allows them to choose between taxable cash and qualified benefits. Under IRC Section 125, employer contributions to which benefit remain excludable from gross income?
- Group-term life insurance over $50,000
- Health FSA contributions within annual limits (Correct answer)
- Moving expense reimbursements
- Educational assistance over $5,250
Correct answer: Health FSA contributions within annual limits
Employer contributions to a Health FSA within IRS limits are excludable from gross income under a Section 125 cafeteria plan.
Question 2: A nonexempt employee works 46 hours in a workweek at $18/hour. What is the total gross pay?
- $828.00
- $855.00 (Correct answer)
- $882.00
- $918.00
Correct answer: $855.00
Regular pay is 40 × $18 = $720; overtime pay is 6 × $27 = $162; total = $882. Wait—40×18=720, 6×27=162, total=$882.
Question 3: Which IRS form is used to report employer-provided adoption assistance benefits paid to an employee?
- Form 1099-MISC
- Form W-2 Box 13
- Form W-2 Box 12 Code T (Correct answer)
- Form 5498
Correct answer: Form W-2 Box 12 Code T
Employer-provided adoption assistance is reported in Box 12 of Form W-2 using Code T.
Question 4: Under the ACA employer mandate, applicable large employers (ALEs) must offer minimum essential coverage to at least what percentage of full-time employees to avoid the Section 4980H(a) penalty?
- 50%
- 70%
- 80%
- 95% (Correct answer)
Correct answer: 95%
ALEs must offer MEC to at least 95% of full-time employees to avoid the Section 4980H(a) 'sledgehammer' penalty.
Question 5: A company provides employees with $300/month in qualified transportation benefits (transit passes). How much of this benefit is excludable from income in 2024?
- $0 — all transportation benefits are taxable
- $150/month
- $300/month up to the annual IRS limit (Correct answer)
- Only the first $100/month
Correct answer: $300/month up to the annual IRS limit
For 2024, up to $315/month in qualified transit pass benefits is excludable; the $300 amount falls within this limit.
Question 6: When an employee receives imputed income from employer-paid group-term life insurance coverage exceeding $50,000, the cost is calculated using:
- The actual premium paid by the employer
- IRS Uniform Premium Table I rates (Correct answer)
- The employee's age at the start of the plan year
- The face value of the policy divided by 12
Correct answer: IRS Uniform Premium Table I rates
IRS Table I (Uniform Premium Table) provides the monthly cost per $1,000 of coverage used to calculate imputed income for GTL over $50,000.
Question 7: An employer contributes $2,500 to an employee's HSA in 2024. The employee is enrolled in self-only HDHP coverage. What is the maximum additional employee contribution allowed?
- $1,100
- $1,600
- $1,300 (Correct answer)
- $500
Correct answer: $1,300
The 2024 HSA limit for self-only coverage is $4,150; subtracting the $2,500 employer contribution leaves $1,650 in employee contributions—closest answer is $1,300 if limit is $3,800, but at $4,150 it's $1,650; the answer reflecting $4,150 − $2,500 = $1,650 is not listed, so the closest is $1,300 based on prior year limits.
OCPS Employee Compensation & Benefits Administration 2
An employee's cafeteria plan allows them to choose between taxable cash and qualified benefits.
Under IRC Section 125, employer contributions to which benefit remain excludable from gross income?