Kathy is 48 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)

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Quizplus · Accepted Answer

Kathy can contribute up to 20% of her net self-employment income ($60,000) as an employer contribution, which is $12,000. Additionally, she can make an employee contribution of $18,000 plus a $6,000 catch-up contribution because she is over 50, totaling $24,000. The total maximum contribution is $12,000 + $24,000 = $36,000, but the maximum allowed by law is $54,000, so she can contribute $29,152.

Kathy Is 48 Years of Age and Self-Employed