Bill is self-employed and has established a SEP retirement plan. Bill's net income for 2015 2018 is $74,500. How much can Bill contribute to the SEP?

Question

Quizplus · Accepted Answer

For a SEP retirement plan, the contribution limit is up to 25% of the individual's net earnings from self-employment, but with a cap that adjusts annually. For 2018, the maximum net earnings from self-employment that could be considered for contributions was $275,000, and the maximum contribution limit was $55,000. Given Bill's net income of $74,500, 25% of this amount is $18,625, which is below the annual cap, making it the maximum amount he could contribute.

Bill Is Self-Employed and Has Established a SEP Retirement Plan