Question 25

A 1,500-employee for-profit corporation can establish a 401(k) retirement plan.

A 401(k) plan is a common retirement savings plan that allows employees to save for retirement while reducing their taxable income, making it suitable for a corporation of this size.

A) 401(k).

This option is correct as a 401(k) plan is designed specifically for for-profit corporations, allowing them to offer tax-advantaged retirement savings to their employees. It accommodates businesses of various sizes, including those with 1,500 employees, making it a feasible and effective choice.

B) 403(b).

A 403(b) plan is primarily intended for nonprofit organizations, educational institutions, and certain government entities. Since the question specifies a for-profit corporation, this option is not applicable and therefore incorrect.

C) Keogh.

Keogh plans are designed for self-employed individuals and unincorporated businesses, making them unsuitable for a corporation with 1,500 employees. This option does not align with the context of a large for-profit corporation, rendering it incorrect.

D) Simplified Employee Pension Plan.

While a Simplified Employee Pension (SEP) plan can be used by for-profit corporations, it is generally more suited for smaller businesses or self-employed individuals. A 401(k) plan offers more robust features and benefits for a larger workforce, making this option less ideal for a corporation of the specified size.

Conclusion

The 401(k) plan is the most appropriate choice for a 1,500-employee for-profit corporation due to its suitability and design for larger organizations. Other options, like the 403(b) and Keogh plans, are not applicable to for-profit corporations, while a SEP plan may not provide the comprehensive benefits needed for a large workforce. Therefore, the 401(k) remains the definitive correct answer.