Which of the following is true concerning SEP IRAs?
A)SEP IRAs are difficult to set up and have high administrative costs.
B)Taxpayers may contribute unlimited amounts to SEP IRAs .
C)Employees of the taxpayer cannot be included in SEP IRAs.
D)Taxpayers with a SEP IRA must contribute for their employees.

Question

Quizplus · Accepted Answer

SEP IRAs (Simplified Employee Pension Individual Retirement Accounts) are relatively easy to set up and have lower administrative costs compared to other retirement plans. Taxpayers may contribute up to 25% of their net earnings from self-employment, or 20% of their net earnings from self-employment if they are employed by someone else. However, taxpayers who have a SEP IRA must also contribute a proportional amount for their eligible employees. Therefore, option D is the correct statement. Option B is incorrect as there is a limit to the contribution. Option A is also incorrect as SEP IRAs are relatively easy to set up with lower costs. Option C is incorrect as eligible employees can be included in a SEP IRA plan.

Which of the Following Is True Concerning SEP IRAs