Which of the Following Statements Is Correct

question 21

Multiple Choice

Which of the following statements is correct?

• A)Contributions to SEP plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the SEP deduction) or $45,000.
• B)The contribution limits for SEPs are the lesser of 25 percent of net self-employment income or $53,000 for a self-employed taxpayer.
• C)Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000.
• D)The contribution limits for SEPs are a maximum of $18,000 ($24,000 for taxpayers 50 or older).

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Definitions:

Stock Dividends

A form of dividend paid to shareholders in the form of additional shares rather than cash, reflecting a company's desire to reinvest its earnings.

Shareholder Share

Represents the portion of a company's equity owned by an individual or institutional shareholder.

EPS

Earnings Per Share represents the fraction of a firm's profits designated for each share of its common stock, serving as a financial metric.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, typically to conserve the company's cash.