Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

Which retirement plans are specifically designed for self-employed individuals?

1. Keogh Plans and 401(k) Plans

2. SEPs and 403(b) Plans

3. Keogh Plans and SEPs

4. Traditional and Roth IRAs

The correct answer is: Keogh Plans and SEPs

The correct response highlights Keogh Plans and Simplified Employee Pension (SEP) Plans as retirement plans that cater specifically to self-employed individuals. Keogh Plans, also known as HR10 plans, are designed for self-employed individuals or unincorporated businesses. These plans allow for higher contribution limits which can be advantageous for those in business for themselves who want to save more for retirement. Similarly, SEPs are another excellent option for self-employed individuals. They are easier to set up and maintain than some other retirement plans and offer flexibility in terms of contribution amounts. SEPs enable businesses to contribute a portion of income towards their retirement savings, which is particularly beneficial for self-employed individuals whose income may vary from year to year. In contrast, while 401(k) plans can be offered by self-employed individuals, they are primarily designed for employees of corporations, making them less specialized than the options noted in the correct answer. The 403(b) plan is tailored towards employees of certain nonprofit organizations and schools, not for self-employed individuals specifically. Traditional and Roth IRAs are available to all individuals, regardless of employment status, but they do not provide the same level of contributions that Keogh Plans and SEPs do for self-employed individuals. Focusing on the