Tessa is a self-employed CPA whose 2013 net earnings from her business (before the H.R.10 plan contribution but after the deduction for one-half of self-employment taxes)is $400,000.What is the maximum contribution that Tessa can make on her behalf to her H.R.10 (Keogh)plan in 2013?

Question

Quizplus · Accepted Answer

The maximum contribution that Tessa can make on her behalf to the H.R.10 plan in 2013 is the lesser of 25% of her net earnings from self-employment or $51,000. In this case, 25% of Tessa's net earnings from self-employment of $400,000 equals $100,000, which is greater than the $51,000 limit. Therefore, the maximum contribution that Tessa can make is $51,000.

Tessa Is a Self-Employed CPA Whose 2013 Net Earnings from Her