Question

SIMPLE plans can be structured as an IRA or a 401(k).
a) True
b) False

Answer 1

Simple plans can be structured as an IRA or a 401(k) and this is true. An IRA is usually set up by an individual, while a 401(k) needs to be set up through an employer.

Step-by-step explanation:

Simple plans can be structured as an IRA or a 401(k), and this statement is TRUE.

An Individual Retirement Account (IRA) is a long-term, tax-sheltered time deposit that anyone can set up on their own or as part of an employer-sponsored account. On the other hand, a 401(k) needs to be set up through an employer. Both IRA and 401(k) are defined contribution plans where individuals can contribute money towards investments that can grow tax-deferred.

The main difference between an IRA and a 401(k) is the way they are set up. IRA is usually set up by an individual, while a 401(k) needs to be set up through an employer.