Under the SEP plan provisions, deductible contributions to a qualified retirement plan on behalf of an employee whose net earned income is $20,000 are limited to:
A)$1,500
B)$2,000
C)$4,000
D)$5,000
E)None of these is correct

Question

Quizplus · Accepted Answer

The maximum deductible contribution limit for an employee in a SEP plan is 25% of their net earned income up to a maximum contribution of $57,000 (for 2020). Therefore, in this scenario, the maximum deductible contribution would be ($20,000 x 25%) = $5,000.

Under the SEP Plan Provisions, Deductible Contributions to a Qualified