Which kind of retirement plan can a 1,500-employee for-profit corporation establish?

Rationale

401(k) plans are suitable for a 1,500-employee for-profit corporation.

401(k) plans are designed for for-profit businesses, allowing employees to save for retirement with tax advantages. These plans are particularly popular among corporations of various sizes, including those with a substantial number of employees like 1,500.

A (401(k).) CORRECT

This choice is correct as 401(k) plans are specifically designed for for-profit organizations, allowing them to offer retirement savings options to their employees. With a 1,500-employee count, a corporation can easily establish a 401(k) plan to facilitate retirement savings with employee contributions and potential employer matching.

B (403(b).) YOUR ANSWER

403(b) plans are intended for non-profit organizations, such as schools and charities, rather than for-profit corporations. Since the question specifies a for-profit corporation, this option is not applicable.

C (Keogh.) YOUR ANSWER

Keogh plans are primarily designed for self-employed individuals and unincorporated businesses. While certain partnerships can establish them, they are not suitable for large for-profit corporations with many employees, making this option incorrect for the given scenario.

D (Simplified Employee Pension Plan.) YOUR ANSWER

Simplified Employee Pension (SEP) plans are typically used by small businesses and self-employed individuals to provide retirement benefits. While they can be utilized by corporations, their structure and limitations make them less common for large for-profit companies with extensive employee bases like the one described.

Conclusion

For a 1,500-employee for-profit corporation, a 401(k) plan is the most appropriate retirement option, offering both flexibility and tax benefits tailored for larger businesses. Other choices, such as 403(b), Keogh, and SEP plans, either cater to non-profit organizations or are better suited for smaller business structures, making them unsuitable for the specified corporation.

Which kind of retirement plan can a 1,500-employee for-profit corporation establish?

401(k) plans are suitable for a 1,500-employee for-profit corporation.

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