QKA 1 Module 5 - Compensation Verified Multiple Choice and Conceptual Actual Frequently Tested Exam Questions With Reviewed 100% Correct Detailed Answers Guaranteed Pass!!Current Update!!

QKA 1 Module 5 - Compensation Verified Multiple Choice and Conceptual Actual Frequently Tested Exam Questions With Reviewed 100% Correct Detailed Answers Guaranteed Pass!!Current Update!! Q1. Which of the following is the primary purpose of IRC §415 compensation? A. To determine Social Security wages for FICA purposes B. To apply contribution and benefit limits under IRC §415 C. To calculate participant loan limits D. To determine eligibility for plan entry Answer: B. To apply contribution and benefit limits under IRC §415 Explanation: IRC §415 compensation is used for applying contribution/benefit limits. It is also used for identifying HCEs, key employees in top-heavy testing, and minimum contributions in top-heavy plans. Q2. Which of the following is NOT a permissible definition of IRC §415 compensation? A. W-2 compensation B. 3401(a) wages C. Net earnings from self-employment D. Net earnings after taxes Answer: D. Net earnings after taxes Explanation: IRC §415 compensation must reflect gross compensation definitions; net after-tax pay is not permissible. Q3. True or False: A plan's definition of compensation for benefit accrual purposes must always be IRC §415 compensation. A. True B. False Answer: B. False Explanation: Plans may use IRC §415 compensation, but it is not required. They may instead use another safe harbor definition under IRC §414(s). Q4. Which of the following is considered a safe harbor definition of compensation under IRC §414(s)? A. IRC §415 compensation B. IRC §3401(a) wages with elective deferrals added back C. W-2 wages with certain exclusions D. All of the above Answer: D. All of the above Explanation: IRC §415 compensation, W-2 wages, and 3401(a) wages with appropriate adjustments are all safe harbor definitions. Q5. Which of the following statements about elective deferrals is TRUE? A. Elective deferrals are excluded from §415 compensation for all purposes B. Elective deferrals must be added back for top-heavy minimum benefit calculations C. Elective deferrals are exempt from FICA withholding D. A CODA can be included in a defined benefit plan Answer: B. Elective deferrals must be added back for top-heavy minimum benefit calculations Explanation: Deferrals are excluded from gross wages but added back for plan testing. Deferrals are subject to FICA. CODAs are not permitted in defined benefit plans.