Tessa is a self-employed CPA whose 2019 net earnings from her business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $400,000.What is the maximum contribution that Tessa can make on her behalf to her H.R.10 (Keogh)plan in 2019?
A)$100,000
B)$80,000
C)$70,000
D)$56,000

Question

Quizplus · Accepted Answer

The maximum contribution that Tessa can make to her Keogh plan in 2019 is the lesser of $56,000 or 20% of her net earnings from self-employment. In this case, 20% of her net earnings from self-employment is $80,000, but the maximum contribution is limited to $56,000. Therefore, the answer is D.

Tessa Is a Self-Employed CPA Whose 2019 Net Earnings from Her