PSI Life Exam Practice Test

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Prepare for the PSI Life Exam. Utilize flashcards and multiple-choice questions with detailed hints and explanations. Ensure success on your exam!

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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.