Jana has $225,000 of earned income in 2019.Calculate the amount she can contribute to a SEP.
A)$22,500
B)$24,500
C)$56,000
D)$56,250
E)None of these

Question

Quizplus · Accepted Answer

Jana can contribute up to 25% of her earned income, up to a maximum of $56,000 in 2019, to a SEP. Therefore, the amount she can contribute is 25% * $225,000 = $56,250. However, since the maximum contribution limit for 2019 is $56,000, that will be the maximum amount she is allowed to contribute.

Jana Has $225,000 of Earned Income in 2019