Kathy is 60 years of age and self-employed. During 2017 she reported $100,000 ofrevenues and $40,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to a simplified employee pension (SEP) IRA for 2017? (Round your final answer to the nearest whole number)
A) $11,152.
B) $54,000.
C) $60,000.
D) $17,152.

Question

Quizplus · Accepted Answer

The maximum contribution to a SEP IRA is the lesser of 25% of net earnings from self-employment or $54,000 for 2017. Kathy's net earnings are $60,000 ($100,000 - $40,000). The contribution is calculated as 20% of net earnings after deducting the self-employment tax adjustment, which is approximately $11,152.

Kathy Is 60 Years of Age and Self-Employed