Which of the Following Is a Critical Difference Between SEP-

question 38

Multiple Choice

Which of the following is a critical difference between SEP- individual retirement accounts and other individual retirement accounts?

• A)Employee contribution is very high in SEP-IRAs.
• B)The limits of SEP-IRAs are substantially larger than other IRAs.
• C)Employee contribution is taxable in SEP-IRAs.
• D)Annual deduction limits are not applicable for SEP-IRAs.
• E)Only a narrow cross section of employees is included in the SEP.

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Definitions:

Capital Gains Return

The profit realized from the sale of securities or investments which have increased in value over the time they were held.

Super-Normal Voting Rights

Voting rights that are greater than one vote per share, typically granted to certain class of shares to retain control in a company.

Preemptive Right

The right of existing shareholders to purchase additional shares in a company before the company offers them to the public, to maintain their proportionate ownership in the company.

After-Tax Yield

The profitability of an investment after all taxes have been deducted, providing a true picture of the investment's return.