Kathy is 60 years of age and self-employed. During 2016 she reported $400,000 of revenues and $100,000 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 this year to a simplified employee pension (SEP) IRA?

Question

Quizplus · Accepted Answer

Her maximum contribution is the lesser of (1) $53,000 or (2) $57,727 [20% × ($300,000)] - [((300,000 × .9235 - 118,500) × 2.9% × 50%) + (118,500 × .153 × 50%)].

Kathy Is 60 Years of Age and Self-Employed