PFS Employee Benefits Planning

Question 1

What is a key feature that distinguishes a Health Savings Account (HSA) from a Flexible Spending Account (FSA)?

Accepted Answer

HSA balances roll over year-to-year without forfeiture

Answer

HSA funds must be used within the plan year

Answer

HSAs are available with any health insurance plan

Answer

HSA contributions are made only by employers

Question 2

To be eligible to contribute to an HSA, an individual must be enrolled in which type of health plan?

Accepted Answer

High-Deductible Health Plan (HDHP)

Answer

Preferred Provider Organization (PPO)

Answer

Health Maintenance Organization (HMO)

Answer

Exclusive Provider Organization (EPO)

Question 3

Which of the following is a primary advantage of a 401(k) plan over a traditional defined benefit pension plan from an employee's perspective?

Accepted Answer

The employee retains the vested account balance if they change employers

Answer

The employer bears all investment risk

Answer

Benefits are guaranteed regardless of market performance

Answer

Contributions are mandatory for all employees

Question 4

What is the primary tax advantage of a Dependent Care Flexible Spending Account (DCFSA)?

Accepted Answer

Contributions are made with pre-tax dollars, reducing the employee's taxable income

Answer

Contributions grow tax-deferred and withdrawals are always tax-free

Answer

Unused funds roll over to the next plan year without limit

Answer

There is no annual contribution cap for dependent care expenses

Question 5

Under a graded vesting schedule, an employee is 20% vested after year 2, 40% after year 3, 60% after year 4, 80% after year 5, and 100% after year 6. If an employee leaves after 4 years with $20,000 in employer 401(k) match contributions, how much can the employee keep?

Accepted Answer

$12,000

Answer

$4,000

Answer

$8,000

Answer

$20,000

Question 6

Which type of employer-sponsored group life insurance benefit is excludable from an employee's gross income up to $50,000 under IRC Section 79?

Accepted Answer

Group Term Life Insurance

Answer

Universal Life Insurance

Answer

Whole Life Insurance

Answer

Variable Universal Life Insurance

Question 7

What is a key risk associated with a non-qualified deferred compensation (NQDC) plan that distinguishes it from a qualified retirement plan?

Accepted Answer

Plan assets remain general assets of the employer, exposing participants to insolvency risk

Answer

Contributions are subject to immediate income taxation

Answer

The plan is funded in a trust protected from employer creditors

Answer

Government regulations guarantee benefit payments to participants