Kathy is 60 years of age and self-employed.During 2017 she reported $500,000 of revenues and $100,000 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 simplified employee pension (SEP)IRA for 2017? (Round your final answer to the nearest whole number)
A) $54,000.
B) $60,000.
C) $77,351.
D) $369,400.

Question

Quizplus · Accepted Answer

The maximum contribution to a SEP IRA for 2017 is the lesser of 25% of net earnings from self-employment or $54,000. Kathy's net earnings are $400,000 ($500,000 - $100,000), and 25% of that is $100,000. However, the contribution is capped at $54,000.

Kathy Is 60 Years of Age and Self-Employed