Life License Qualification Program (LLQP) Practice Exam

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Prepare for your Life License Qualification Program (LLQP) Exam. Study with flashcards and multiple choice questions, enhanced with hints and explanations. Master the content to excel in your exam!

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Which retirement plan is specifically designed for sole proprietors and their employees?

SEP Plan
Keogh Plan
Individual Retirement Account (IRA)
SIMPLE Plan

The correct answer is: Keogh Plan

The correct answer, the Keogh Plan, is a type of retirement plan specifically designed for self-employed individuals and sole proprietors. It allows these individuals to contribute significantly more than traditional IRAs, making it an attractive option for those who are self-employed. Keogh Plans can be established as either a defined contribution plan or a defined benefit plan, giving sole proprietors flexibility in how they want to structure their retirement savings. This is particularly beneficial for individuals looking to maximize their retirement contributions, as they can set aside a substantial portion of their income for retirement. The SEP Plan, while also available to self-employed individuals and their employees, tends to have different contribution limits and eligibility requirements. An Individual Retirement Account (IRA) is designed for individuals but is less specialized for self-employed workers. The SIMPLE Plan is aimed at smaller businesses with employees, providing an easy way to save for retirement but not specifically tailored for sole proprietors alone. Therefore, given the specific needs of sole proprietors, the Keogh Plan is the most appropriate choice.