Kathy is 60 years of age and self-employed.During 2017,she reported $100,000 of revenues and $40,000 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 an individual 401(k)for 2017? (Round your final answer to the nearest whole number)
A) $29,152.
B) $35,152.
C) $54,000.
D) $60,000.

Question

Quizplus · Accepted Answer

For 2017, the maximum contribution to an individual 401(k) for someone aged 50 or older is $60,000. However, contributions are limited by the self-employment income. Kathy's net self-employment income is $60,000 ($100,000 revenues - $40,000 expenses). The maximum contribution is the lesser of $60,000 or the sum of the elective deferral limit ($18,000) plus 20% of net self-employment income ($12,000), plus a catch-up contribution of $6,000, totaling $35,152.

Kathy Is 60 Years of Age and Self-Employed