PFS Employee Benefits Planning 2

Question 1

What is the maximum annual elective deferral an employee can contribute to a 401(k) plan in 2024 (excluding catch-up contributions)?

Accepted Answer

$23,000

Answer

$20,500

Answer

$22,500

Answer

$23,500

Question 2

An employer sponsors a SIMPLE IRA plan. Which of the following employer contribution formulas is required by the IRS?

Accepted Answer

Either a matching contribution of up to 3% of compensation or a 2% non-elective contribution

Answer

Profit-sharing contributions up to 25% of employee compensation

Answer

A flat dollar contribution of $1,000 per eligible employee

Answer

Contributions equal to the employee's Social Security payroll tax

Question 3

What distinguishes a SEP-IRA from a SIMPLE IRA regarding who is permitted to make contributions?

Accepted Answer

SEP-IRAs allow only employer contributions; SIMPLE IRAs allow both employer and employee contributions

Answer

SEP-IRAs allow both employer and employee contributions; SIMPLE IRAs allow only employer contributions

Answer

Both plan types allow only employee elective deferrals

Answer

Both plan types allow only employer discretionary contributions

Question 4

A defined benefit pension plan credits employees with 2% of final salary per year of service. An employee retires after 30 years with a final salary of $80,000. What is the annual pension benefit?

Accepted Answer

$48,000

Answer

$16,000

Answer

$24,000

Answer

$32,000

Question 5

Which of the following best describes the 'triple tax advantage' of a Health Savings Account (HSA)?

Accepted Answer

Contributions are pre-tax, growth is tax-deferred, and qualified withdrawals are tax-free

Answer

Contributions are post-tax, growth is tax-free, and all withdrawals are tax-deductible

Answer

Contributions are tax-free, all withdrawals are tax-deductible, and gains are untaxed

Answer

Employees receive a tax credit, deduction, and exclusion simultaneously on contributions

Question 6

Under the SECURE 2.0 Act, what is the required minimum distribution (RMD) starting age for individuals born between 1951 and 1959?

Accepted Answer

73

Answer

70½

Answer

72

Answer

75

Question 7

An employee participates in both a 401(k) plan and a 403(b) plan in the same year. How does the IRS annual elective deferral limit apply?

Accepted Answer

A single combined $23,000 limit (2024) applies across both plans in aggregate

Answer

The $23,000 limit (2024) applies separately to each plan, allowing up to $46,000 total

Answer

No limit applies when participating in two different employer-sponsored plans simultaneously

Answer

The limit is reduced to $11,500 per plan when participating in two plans