Quiz Questions- Cafeteria Plans

An employee had $300.00 deducted for a medical flexible spending account during the plan year. In November, the employee was terminated and $100.00 remained in the account. When must the employer reimburse the $100.00 to the employee? a. With the employee's final paycheck b. Within 30 days after termination c. No later than December 31 of the current year d. When $100.00 of qualified expenses are substantiated

d. When $100.00 of qualified expenses are substantiated

An employer contributes $350.00 per month to each employee's Sec. 125 medical plan. An employee elects to receive the $350.00 per month in cash since the spouse's employer offers an excellent medical plan. What are the implications of taking the $350.00 in cash? The employee cannot make this choice under federal regulations. Only social security and Medicare taxes are withheld from the amount. The $350.00 is taxable income when received. The $350.00 is a tax-free benefit.

The $350.00 is taxable income when received

An employee has elected to have $200.00 per month contributed to a medical flexible spending account. At the end of the plan year's grace period, $100.00 remains in the account. What happens to the $100.00? The amount becomes taxable income. The amount is forfeited by the employee. The amount can be received in cash without taxation. The amount can be carried over to the next plan year without amending the plan.

The amount is forfeited by the employee.

In a medical flexible spending account, an employee has elected to defer $1,000.00 for the plan year. Early in the plan year, the employee incurs $1,500.00 in medical expenses. What occurs? a. The employer reimburses the employee $1,000.00 tax free. b. The employer reimburses the employee $1,500.00 tax free. c. The employee can carry over the $500.00 excess to the next plan year without amending the plan. d. The employee can retroactively change the election to have an additional $500.00 deferred during the year.

a. The employer reimburses the employee $1,000.00 tax free.

An employee has contributed $300.00 YTD into a medical flexible spending account. In November, the employee was terminated with $100.00 remaining in the account after all qualified reimbursements had been made. When must the employer reimburse the employee's $100.00? a. By January 31 along with Form W-2 b. When additional qualified medical expenses are submitted Within 30 days after termination d. With the final paycheck

b. When additional qualified medical expenses are submitted

A company's cafeteria plan provides each employee with $200.00 per month to pay for chosen benefits. After selecting benefits, one employee has $50.00 per month left and requests a payment of $50.00 per month. This $50.00 is: a. nontaxable compensation. b. taxable compensation for all federal taxes. c. taxable compensation for social security and Medicare only. d. taxable compensation for federal income tax only.

b. taxable compensation for all federal taxes.

A company contributes $350.00 each month to a qualified Sec. 125 plan for medical insurance. In addition, $100.00 is contributed to a dependent care flexible spending account. How are these amounts taxed? a. Only $100.00 is fully taxable b. Only $350.00 is fully taxable c. $450.00 is subject only to social security and Medicare taxation d. $450.00 is not taxable income

d. $450.00 is not taxable income

All of the following qualified benefits can be offered under a Sec. 125 plan EXCEPT: adoption assistance. deferred compensation to a 403(b) plan. deferred compensation to a 401(k) plan. elective vacation days.

deferred compensation to a 403(b) plan.

All of the following qualified benefits can be offered under a Sec. 125 plan EXCEPT: medical coverage. long-term disability insurance. dependent care. deferred compensation to a 457(b) plan.

deferred compensation to a 457(b) plan.

Under FSA rules, the uniform coverage provision only applies to a(an): health care plan. dependent care assistance plan. 401(k) deferred compensation plan. adoption assistance plan.

health care plan

EE select Benefits for the next plan year during a company's open enrollment period. In which of the following can an employee change a benefit outside of the open enrollment period?

marital status change, change in dependents, eligibility for health benefits in the market place exchange

All of the following qualified benefits can be offered under a Sec. 125 plan EXCEPT: a medical flexible spending account. qualified transportation fringe benefits. additional vacation days. deferred compensation to a 401(k) plan.

qualified transportation fringe benefits.

Under a Sec. 125 plan, all of the following benefits are qualified benefits EXCEPT: additional vacation days. deferred compensation to a 401(k) plan. scholarship and fellowship grants/education medical coverage.

scholarship and fellowship grants/education

A health care flexible spending account may allow a $570 carryover if: the plan does not have a grace period. an employee chooses carryover instead of grace period. the plan is a non-calendar year plan. the employee forfeits the uniform coverage provision.

the plan does not have a grace period.