Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax).He has a profit sharing plan (i.e., defined contribution plan).What is the maximum amount Fred can contribute to his retirement plan?
A)$28,000
B)$35,000
C)$40,000
D)$140,000
E)None of these

Question

Quizplus · Accepted Answer

The maximum amount Fred can contribute to his retirement plan is $28,000. This is because the maximum contribution limit for a profit sharing plan is 25% of the participant's compensation, and Fred's compensation is $140,000.

Fred Is a Self-Employed Accountant with Gross Earned Income of $140,000