Securities Training Series 7 Practice Test

The correct answer is that corporations and small businesses are responsible for setting up a Simplified Employee Pension Individual Retirement Account (SEP IRA). A SEP IRA is designed primarily for small businesses, including corporations and sole proprietorships, providing an easy way for employers to contribute toward their employees' retirement savings.

This type of retirement plan allows employers to make contributions that are tax-deductible, which can benefit not only the business but also the employees as they prepare for retirement. The ability to contribute is typically allocated based on the employees' compensation, and employers are given significant flexibility in deciding their contribution amounts annually, which makes it particularly appealing to small businesses.

While self-employed individuals can definitely utilize a SEP IRA, they don't exclusively set it up for themselves; rather, the plan is intended for use by any eligible employer, including corporations and small businesses. This differentiates it from options that might apply to non-profit organizations or all individuals, which do not accurately reflect the intended user base for a SEP IRA design.