Elizabeth is a secondary school teacher with an employer-sponsored retirement plan and is also self-employed as an educational consultant.If Elizabeth's net self-employment income is $16,000,what is her maximum contribution to a Keogh account?

Question

Quizplus · Accepted Answer

The maximum contribution to a Keogh account is calculated based on a percentage of the individual's self-employment income. For 2021, the maximum contribution is 20% of net self-employment income or $58,000, whichever is lower. In this case, 20% of Elizabeth's net self-employment income of $16,000 is $3,200, which is lower than the maximum contribution limit. Therefore, her maximum contribution to a Keogh account would be $3,200, which is option C. The fact that Elizabeth also has an employer-sponsored retirement plan does not affect her ability to contribute to a Keogh account as long as she meets the eligibility requirements.

Elizabeth Is a Secondary School Teacher with an Employer-Sponsored Retirement