Contributions by a self-employed individual to a SEP plan for 2018 are limited to the lesser of a percent of net earned income or:

Question

Quizplus · Accepted Answer

The maximum contribution limit for a SEP plan for 2018 is $55,000 or 25% of the individual's net earned income, whichever is less. Since the contribution limit in option D is within this limit, it is the best choice. Option A is incorrect because $18,500 is the maximum contribution limit for a 401(k) plan, not a SEP plan. Option B is incorrect because a self-employed individual can contribute to a SEP plan. Option C is incorrect because it exceeds the maximum contribution limit for a SEP plan.

Contributions by a Self-Employed Individual to a SEP Plan for 2018