32. A retirement plan that may be established by an employee, regardless of any other retirement plan is called a(n):
Answer: A
An Individual Retirement Account (IRA) is a retirement plan that may be established by an employee, regardless of any other retirement plan.
An Individual Retirement Account (IRA) allows individuals to save for retirement independently, without being tied to an employer's retirement plan. This flexibility makes it a suitable option for employees to contribute to their retirement savings regardless of other plans they may participate in.
A) Individual Retirement Account (IRA)
This option is correct because an IRA is specifically designed to be established by individuals for retirement savings, independent of any employer-sponsored plans. It offers unique tax advantages and can be funded regardless of participation in a workplace retirement account.
B) Keogh (Unincorporated) Pension plan
This option is incorrect as a Keogh plan is primarily intended for self-employed individuals and some unincorporated businesses. It is not available for employees in the same way an IRA is, and it often requires more complex administration and compliance compared to an IRA.
C) 401(k) plan
This option is also incorrect because a 401(k) plan is an employer-sponsored retirement savings plan that allows employees to save and invest a portion of their paycheck before taxes are taken out. Employees cannot establish a 401(k) independently if their employer does not offer one.
D) Corporate pension plan
This option is incorrect as well, since a corporate pension plan is a type of employer-sponsored retirement plan that typically provides benefits based on an employee's salary and years of service. Like the 401(k), it cannot be established by an individual independently of their employer.
Conclusion
The Individual Retirement Account (IRA) stands out as the only option that allows for independent establishment by an employee, making it versatile and accessible. In contrast, the other options are primarily employer-dependent plans that do not provide the same level of flexibility for individual employees looking to save for retirement.