practical sense) means they also could appear on the exam. So, in addition to what’s discussed
here, be sure to review other sources in an effort to familiarize yourself with HR-related
responsibilities:
o Develop/select and implement a payroll system.
o Administer payroll functions.
-HR-related knowledge:
o Executive compensation methods- pg. 330
Be aware of ERISA participation rules for defined benefit and defined contribution plans. In
general, employee must be allowed to participate in a qualified plan after meeting the following
requirements:
o The employee is at least 21 years old- Note that an employee can be excluded for not
having reached a minimum age (which cannot exceed age 21) but cannot be excluded
for having reached a maximum age. In other words, no matter how old an employee is,
he or she can still- and always- participate in the plan.
o The employee has at least one year of service- For qualified plans, a year of service is
generally 1,000 hours of service performed during the plan year. Employees who do not
perform 1,000 hours of service are not considered to have performed one year of
service, even if services were performed for a 12 month period. (Note: For plans other
than 401k, this requirement is two years, as long as the plan has fully vested after not
more than two years of service.)
-An employer may, however, choose to implement less-restrictive eligibility
requirements, suchas a minimum age requirement that is younger than 21 or a service
requirement of less than one year.- pg. 333
ERISA is highly detailed and complex. If you do not have recent, in-depth, and first-hand
experience with the application of ERISA, be sure to dig deeper. Be familiar with the rules under
ERISA, the enforcement of ERISA, administrative requirements placed on employers by ERISA,
the role of the PBGC, vesting guidelines, and so on.- pg. 334
Like ERISA and COBRA, HIPAA is a highly complex and involved law. Don’t let the apparent
simplicity of the info presented here mislead you; it’s necessary to dig much deeper to truly
understand the nuances and subtleties of this law.- pg. 338
FSA’s offer distinct advantages as well as potentially distinct disadvantages for employers as well
as for employees. Look into the rules governing FSA’s before instituting this plan at your
organization- and before taking the PHR exam. –pg. 346
The IRS regulates 401k tax-related issues, such as maximum deduction amounts,
nondiscrimination tests, and distribution rules. Be familiar with these rules and regulations
because questions about them may appear on the PHR exam.- pg 347
Be familiar with some of the formulas that can be used to calculate defined benefit plan
benefits. Examples could include
o Flat benefit times years of service
o Career average
o Final average earnings- pg. 353