Kathy is 48 years of age and self-employed. During 2020 she reported $138,000 of revenues and $55,200 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 SEP IRA for 2020? (Round your final answer to the nearest whole number.)
A)$15,390.
B)$17,171.
C)$71,900.
D)$57,000.

Question

Quizplus · Accepted Answer

Kathy's net self-employment income is $138,000 - $55,200 = $82,800. The maximum SEP IRA contribution for 2020 is 20% of net self-employment income, up to a maximum of $57,000. Therefore, Kathy can contribute a maximum of $82,800 x 20% = $16,560 to her SEP IRA for 2020.

Kathy Is 48 Years of Age and Self-Employed