Which retirement plan may a sole proprietorship use ONLY if the employees are included?

The correct answer, which is the Keogh pension plan, reflects the unique characteristics associated with retirement plans specifically designed for self-employed individuals and small business owners. A Keogh plan, also known as an HR-10 plan, allows a sole proprietor to contribute to a retirement plan while also enabling them to include their employees.

One key feature of a Keogh plan is that it requires that if a sole proprietor establishes such a plan, any employees must be included as well. This inclusion is an essential aspect because it ensures that the plan is not just for the owner but for all eligible workers, making it a more comprehensive retirement solution.

In contrast, while other retirement plans like a 401(k), pension plan, or SIMPLE IRA can also accommodate sole proprietors, they do not have the same stipulation regarding employee participation. For instance, a sole proprietor may set up a 401(k) or a SIMPLE IRA solely for themselves without needing to extend coverage to employees. Hence, they are not limited like they are with a Keogh plan when it comes to employee inclusion.

Therefore, the only retirement plan that mandates the inclusion of employees if it is utilized by a sole proprietorship is the Keogh pension plan.