Benefits Training Day 6a
401(K) Setup
This certification test contains questions of different formats. The format of the questions include multiple choice; true/false and fill in the blank etc. . . Please remember to chose the best response to each question. You are able to use your notes and participation guide along with the ISolved system while taking the test. Read carefully. In order to obtain your certification, you must score a passing score of 75 percent. Good Luck!
- 1.
Please set up a 401(k) plan that includes both 401(k) and 401(k) Roth. The carrier is Principal. They want the contributions and deferrals to be ACH’ed to them. Set up the payee and use a routing # from your bank. Make up an account number. You will have two EE Contribution Plan Matches, one for regular EEs that has a tiered match of First 1% @ 100%, next 2% @ 50% and the last 3% at 25%. The second match for executives has one tier. First 4% at 100%. The company also has an Eligible Wage Plan Match (Safe Harbor) Match of 3%. It will go to all EEs. EE deferrals begin first day of the month after 6 months from their hire date with a forced deferral of 3% unless they opt out or choose a different amount. The client wants this to happen automatically. Matches begin on the first day of the month following 1 year from their hire date. Start date of the plan was 1/1/2013. Use all eligible wage earnings you have except any reimbursement type earnings. Do not use any Eligible Wage Memo Calcs nor any Eligible Wage Reductions. Three of the EEs have loans. The client tells you that 2 of them are first time loans and one of them is on his third loan. Please email screen shots to your presenter.
- 2.
The Payroll Implementation Specialist will most likely set up a 401(k) “shell” because
- A.
They do not believe you are capable of doing it correctly.
- B.
Percentage deferrals and contributions will not work without a Deferred Comp plan set up.
- C.
The customer asked them to.
- D.
All of the above.
Correct Answer
B. Percentage deferrals and contributions will not work without a Deferred Comp plan set up.Explanation
The correct answer is "Percentage deferrals and contributions will not work without a Deferred Comp plan set up." This is because a 401(k) plan requires a Deferred Compensation (Deferred Comp) plan to be set up in order for percentage deferrals and contributions to work properly. Without a Deferred Comp plan, the payroll system would not be able to accurately calculate and process the employee's contributions to their 401(k) plan.Rate this question:
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- 3.
Which of the following is not true
- A.
You can create multiple Deferred Comp benefit types on the company level.
- B.
You can create multiple Deferred Comp plans from that one benefit type, but you shouldn't.
- C.
You may use multiple Deduction Codes on the same Deferred Comp Plan.
- D.
You may have multiple Matches (memo calcs) on the same Deferred Comp Plan.
Correct Answer
A. You can create multiple Deferred Comp benefit types on the company level.Explanation
The statement that is not true is "You can create multiple Deferred Comp benefit types on the company level." This means that it is not possible to create multiple Deferred Comp benefit types on the company level.Rate this question:
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- 4.
Which of the following are not setup under Deferred Comp
- A.
403(b)
- B.
Pension Plans
- C.
Profit Sharing
- D.
All of the above are set up under Deferred Comp
Correct Answer
D. All of the above are set up under Deferred CompExplanation
All of the options listed, including 403(b) plans, pension plans, and profit sharing, are set up under Deferred Comp. This means that all of these options are part of a deferred compensation arrangement, where employees can defer a portion of their income to be received at a later date, typically during retirement.Rate this question:
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- 5.
Fill in the blank: An EE may continue contributing to a Deferred Comp after he/she has taken out a loan.
- A.
Always
- B.
Never
- C.
Sometimes (depends on the client’s contract with the carrier).
- D.
During a personal financial emergency,
Correct Answer
C. Sometimes (depends on the client’s contract with the carrier).Explanation
An EE may continue contributing to a Deferred Comp after he/she has taken out a loan sometimes, depending on the client's contract with the carrier.Rate this question:
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- 6.
Regarding multiple Deferred Comp plans on the same Deferred Comp benefit type, one could say:
- A.
There really isn't a problem doing it.
- B.
It is just like setting up an HMO medical plan and a PPO medical plan under the Pre-tax Medical benefit type, so it is actually recommended to do it this way.
- C.
Do it only when you need to use multiple deduction codes including 401(k) loans.
- D.
If you do it, the EE CANNOT be enrolled in multiple plans under the same benefit types. The system kicks you out or terms one of the plans.
Correct Answer
D. If you do it, the EE CANNOT be enrolled in multiple plans under the same benefit types. The system kicks you out or terms one of the plans.Explanation
Having multiple Deferred Comp plans on the same Deferred Comp benefit type is not a problem. It is similar to setting up different medical plans under the Pre-tax Medical benefit type. However, it is recommended to only do it when multiple deduction codes, including 401(k) loans, are needed. If an employee is enrolled in multiple plans under the same benefit types, the system will kick them out or terminate one of the plans.Rate this question:
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- 7.
The Export Code field on the Plans tab of the Deferred Comp plan is required because
- A.
It is needed for eBN Carrier Connections
- B.
It is needed for COBRA
- C.
It is actually not required
- D.
The match codes will not work without it.
Correct Answer
C. It is actually not requiredExplanation
The Export Code field on the Plans tab of the Deferred Comp plan is actually not required. This means that it is not necessary to fill in this field in order to successfully complete or use the plan. It is not needed for eBN Carrier Connections or COBRA, and the match codes will still work without it.Rate this question:
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- 8.
Which of the following is false
- A.
You must use a payment option of ACH Payment or Combined Check so the funds from all EEs will go together in a lump sum.
- B.
There is a concern with using the third party payee for a Deferred Comp plan that the funds will get to the carrier before the data and they will be rejected because the carrier does not know how to disburse them.
- C.
There is no pre-note ability with Third Party ACH payment, so you have to make sure you get the account number correct the first time.
- D.
When you put the Third Party in the Provider field, it will send the funds to the Deferred Comp carrier.
Correct Answer
D. When you put the Third Party in the Provider field, it will send the funds to the Deferred Comp carrier.Explanation
When you put the Third Party in the Provider field, it will not send the funds to the Deferred Comp carrier.Rate this question:
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- 9.
Evaluate the following Tiered Match statement: Match is: First 2% @ 100%, next 2% @ 50%, final 3% @ 25%.
- A.
This is an example of an Eligible Wage Plan Match.
- B.
If an EE were to defer 2%, he would get 100% Match.
- C.
If an EE were to defer 10% he would get 25% match on the last 2 percent of his deferral.
- D.
This tiered match statement would not work. There are too many levels.
Correct Answer
B. If an EE were to defer 2%, he would get 100% Match.Explanation
The given explanation states that if an employee were to defer 2% of their salary, they would receive a 100% match. This aligns with the tiered match statement provided, which states that the first 2% of the employee's deferral will be matched at 100%. Therefore, the correct answer is that if an employee were to defer 2%, they would receive a 100% match.Rate this question:
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- 10.
A Forced % Enrollment means
- A.
A default value goes on the Calculations Parameter tab on the deduction code and working in conjunction with the auto-enroll feature will automatically enroll any eligible person with this deferral percentage
- B.
The EE must have a default percentage on his enrollment record when he/she signs up
- C.
The HR Admin must go in and manually enroll every single person with the same deferral percentage.
- D.
You can only force the deferral. Any type of Match must be manually entered
Correct Answer
A. A default value goes on the Calculations Parameter tab on the deduction code and working in conjunction with the auto-enroll feature will automatically enroll any eligible person with this deferral percentageExplanation
A Forced % Enrollment means that a default value is set on the Calculations Parameter tab of the deduction code. This default value, when used in conjunction with the auto-enroll feature, will automatically enroll any eligible person with the specified deferral percentage. The employee must have this default percentage on their enrollment record when they sign up. The HR Admin does not need to manually enroll each person with the same deferral percentage. However, it is important to note that this forced enrollment only applies to the deferral, and any type of match must still be manually entered.Rate this question:
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- 11.
Auto-Enroll (to add a blank enrollment record on the EE level) is used mostly with the “shell” setup because:
- A.
Forced percentage enrollments need it.
- B.
Eligible Wage Plan matches need it.
- C.
A blank enrollment record is needed to make the straight deductions work.
- D.
All of the above.
Correct Answer
D. All of the above.Explanation
Auto-Enroll is used with the "shell" setup because it is needed for forced percentage enrollments, eligible wage plan matches, and to make straight deductions work. Therefore, the correct answer is "All of the above."Rate this question:
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- 12.
You must ask the client which 401(k) Loan # deduction code to apply to a person with a loan because you cannot assume that just because the EE only has one loan that it is their 1st loan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that it is important to ask the client which 401(k) Loan deduction code to apply to a person with a loan because having only one loan does not necessarily mean it is their first loan. It is necessary to confirm the loan details with the client to ensure accurate and appropriate deductions are made.Rate this question:
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- 13.
An Eligible Wage Plan Match only works if the EE has a deferral as well.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
An Eligible Wage Plan Match does not require the employee (EE) to have a deferral. It is a type of retirement plan where the employer matches a certain percentage of the employee's wages contributed to the plan. This match is independent of whether the employee chooses to defer a portion of their wages or not. Therefore, the statement that an Eligible Wage Plan Match only works if the EE has a deferral is incorrect.Rate this question:
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- 14.
If you are doing a full setup, you will need to check the 401(k) Loan Deductions boxes on the Plans Deduction section of the Plans tab of the Deferred Comp plan, because 401(k) loans can directly affect your reporting even though they are managed through Payroll.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When setting up a full setup, it is necessary to check the 401(k) Loan Deductions boxes on the Plans Deduction section of the Plans tab of the Deferred Comp plan. This is because 401(k) loans can have a direct impact on reporting, even though they are managed through Payroll.Rate this question:
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- 15.
You will build your Match memo calcs under the Payroll\Memo Calcs section.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The correct answer is False because the statement is incorrect. The Match memo calcs should not be built under the Payroll\Memo Calcs section.Rate this question:
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- 16.
Whether the deductions are run from Payroll or from the Benefits module, the EE will always need a Deferred Comp enrollment record.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
This statement is true because regardless of whether the deductions are run from the Payroll module or the Benefits module, the employee will always need a Deferred Comp enrollment record. This means that regardless of the specific module used, the employee must have a record indicating their enrollment in Deferred Compensation in order for the deductions to be processed correctly.Rate this question:
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- 17.
You do not need to use the Match Eligibility tab unless you have multiple matches or the single match you have does not have the same eligibility as the plan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is suggesting that the Match Eligibility tab is not necessary unless there are multiple matches or if the single match does not have the same eligibility as the plan. Therefore, the answer "True" indicates that the statement is correct and there is no need to use the Match Eligibility tab unless the mentioned conditions are met.Rate this question:
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- 18.
You can easily setup an eligibility filter using “Normal Hours” under the EE Payroll section to determine if an EE meets the eligibility requirement of having worked 1000 hours.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The correct answer is False. The explanation is that you cannot set up an eligibility filter using "Normal Hours" under the EE Payroll section to determine if an EE meets the eligibility requirement of having worked 1000 hours.Rate this question:
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- 19.
Never use the “Auto Adjust Based on YTD Amounts” check box as it will mess up the match for any EE that has not deferred from the beginning of the plan year.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Enabling the "Auto Adjust Based on YTD Amounts" check box can cause issues with matching for employees who have not deferred from the start of the plan year. This suggests that using this option may lead to incorrect calculations or discrepancies in the matching process. Therefore, the statement "Never use the 'Auto Adjust Based on YTD Amounts' check box as it will mess up the match for any EE that has not deferred from the beginning of the plan year" is true.Rate this question:
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- 20.
If you do not check the “Limit to Specified Deductions” box and the appropriate sub- boxes every time, the match will not calculate on the deferral.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
If you do not check the "Limit to Specified Deductions" box and the appropriate sub-boxes every time, the match will still calculate on the deferral. Therefore, the statement "the match will not calculate on the deferral" is incorrect.Rate this question:
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Current Version
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Mar 21, 2023Quiz Edited by
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Dec 12, 2014Quiz Created by
Joan Olejniczak
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