Under the SEP plan provisions, deductible contributions to a qualified retirement plan on behalf of an employee whose net earned income is $20,000 are limited to:

Question

Quizplus · Accepted Answer

The maximum amount that can be contributed to a SEP plan on behalf of an employee is the lesser of 25% of their compensation or $57,000 in 2020. In this case, the employee's net earned income is $20,000, so the maximum allowable contribution is $5,000 (25% of $20,000). Therefore, the correct answer is D.

Under the SEP Plan Provisions, Deductible Contributions to a Qualified