Under a 401(k) plan, what is compared to determine if the plan unfairly discriminates in favor of highly compensated employees?
A) the average percentage of salary made available to the highly compensated to defer is compared to the average percentage of salary made available to other eligible employees to defer
B) the ratio of eligible highly compensated employees is compared to the ratio of eligible other employees
C) the average percentage of salary deferred by the highly compensated is compared to the average percentage of salary deferred by other eligible employees
D) the percentage of highly compensated employees over age 50 who participate is compared to the percentage of all other employees who participate
Question 2
Under one type of retirement plan for small businesses, the employer contributes to an IRA established for each eligible employee.
Under this type of plan, the contribution limits are significantly higher than they are for traditional IRAs and Roth IRAs. This type of plan, which requires little paperwork, is called a
A) simplified employee pension (SEP) plan.
B) defined benefit plan.
C) Keogh plan.
D) 403(b) plan.
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