Question

Sole proprietors can contribute to their own SEP IRAs regardless of whether they contribute to their employee's accounts.

a) True
b) False

Answer 1

Sole proprietors must contribute to their employees' SEP IRAs if they contribute to their own, making the statement false.

Step-by-step explanation:

The question pertains to Simplified Employee Pension (SEP) IRAs and whether sole proprietors can contribute to their own SEP IRAs regardless of whether they contribute to their employee's accounts. The answer to this question is false. According to IRS rules, SEP IRAs require contributions to be made at a set rate for all eligible employees if the employer contributes for themselves. This means that if the sole proprietor contributes to their own SEP IRA, they must also contribute proportionally to their employees' SEP IRAs.