PSI Life Exam Practice Test

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Prepare for the PSI Life Exam with our comprehensive flashcards and multiple choice questions. Each question offers hints and detailed explanations to enhance your understanding and readiness. Ace your exam with confidence!

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What kind of retirement plan can a 1,500-employees for-profit corporation establish?

Pension Plan
IRA
401(k)
Simplified Employee Pension

The correct answer is: 401(k)

A for-profit corporation with 1,500 employees can establish a 401(k) retirement plan, which allows employees to defer a portion of their salary into an individual account. This plan is particularly advantageous for both employers and employees, as it offers tax benefits. Contributions made by employees are often pre-tax, reducing their taxable income for the year. Furthermore, many employers choose to match a portion of the employee's contributions, which helps to incentivize participation. The 401(k) plan is specifically designed for larger organizations and can accommodate a significant employee base, making it suitable for a corporation of this size. Employees then have the flexibility to choose from a variety of investment options within the plan. Additionally, a 401(k) can help attract and retain talent by providing a valuable retirement savings option. Other retirement options, like IRAs and Simplified Employee Pensions (SEPs), typically cater to smaller businesses or self-employed individuals. A pension plan is also an option but generally involves more complex administration and regulatory requirements, making a 401(k) a more practical choice for a larger workforce.