Kathy is 60 years of age and self-employed.During 2013 she reported $100,000 of revenues and $40,000 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 to a simplified employee pension (SEP) IRA for 2013?

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For 2013, the maximum contribution to a SEP IRA is the lesser of 25% of net earnings from self-employment or $51,000. Kathy's net earnings are $60,000 ($100,000 - $40,000). The contribution is calculated as 20% of net earnings after deducting the self-employment tax adjustment, which is approximately $11,152.

Kathy Is 60 Years of Age and Self-Employed