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

question 72

Multiple Choice

In general, which of the following statements regarding self-employed retirement accounts is True?

• A) In general, 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) In general, SEP IRAs have higher contribution limits than individual 401(k)s no matter the age of the contributing taxpayer.
• C) In general, Individual 401(k)s have higher contribution limits than SEP IRAs.
• D) None of the choices are True. In general, both SEP IRAs and individual 401(k)s have exactly the same annual contribution limits.

---

Definitions:

Debt Financing

A method of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors, in return for lending the company money.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.

ROCE

Return on Capital Employed (ROCE) is a financial ratio that measures a company's profitability in terms of the capital it uses.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.