In general,which of the following statements regarding self-employed retirement accounts is true?
A)SEP IRAs have higher contribution limits than individual 401(k) s if the contributing taxpayer is at least 50 years of age at year end.
B)SEP IRAs have higher contribution limits than individual 401(k) s no matter the age of the contributing taxpayer.
C)Individual 401(k) s have higher contribution limits than SEP IRAs.
D)None of these.Both SEP IRAs and individual 401(k) s have exactly the same annual contribution limits.See discussion in the text.

Question

Quizplus · Accepted Answer

Individual 401(k) s have higher contribution limits than SEP IRAs. While the contribution limits for both types of accounts are subject to annual adjustments for inflation, in general, individual 401(k) s allow for higher contributions due to the ability of the self-employed individual to contribute both as an employer and employee, while SEP IRAs only allow for employer contributions. However, individual 401(k) s may have additional administrative requirements compared to SEP IRAs.

In General,which of the Following Statements Regarding Self-Employed Retirement Accounts