Jana has $225,000 of earned income in 2017. Calculate the amount she can contribute to a SEP.
A)$22,500
B)$24,500
C)$54,000
D)$55,000
E)None of the above

Question

Quizplus · Accepted Answer

The maximum contribution limit for a SEP (Simplified Employee Pension) plan is 25% of earned income or $54,000 for the tax year 2017, whichever is less. Since Jana has earned income of $225,000, 25% of it would be $56,250, but since the maximum contribution limit is $54,000, Jana can contribute up to $54,000.

Jana Has $225,000 of Earned Income in 2017