Question

Which of the following statements describing how qualified pension plans differ from SEP and SIMPLE plans is(are) CORRECT?

A) Qualified plan rules provide greater flexibility in the number and makeup of the employees covered by the plan than do the rules pertaining to SEP and SIMPLE plans.
B) Participants must be fully and immediately vested in the contributions to qualified plans, but SEP and SIMPLE plans are permitted to have vesting schedules.
C) SEP and SIMPLE plans offer more flexibility than qualified plans in covering employees.
D) Qualified plans are not subject to vesting requirements, unlike SEP and SIMPLE plans.

Answer 1

Qualified pension plans differ from SEP and SIMPLE plans in terms of vesting requirements and flexibility in covering employees.

Step-by-step explanation:

The correct statement(s) describing how qualified pension plans differ from SEP and SIMPLE plans are:

1. Participants must be fully and immediately vested in the contributions to qualified plans, but SEP and SIMPLE plans are permitted to have vesting schedules.
2. SEP and SIMPLE plans offer more flexibility than qualified plans in covering employees.

A qualified pension plan refers to a retirement plan that meets certain requirements set by the Internal Revenue Service (IRS). It offers long-term tax advantages and has more regulatory requirements than SEP and SIMPLE plans. On the other hand, SEP (Simplified Employee Pension) and SIMPLE (Savings Incentive Match Plan for Employees) plans are less complex and have more flexibility in terms of contribution limits and eligibility.