Kathy is 48 years of age and self-employed.During the year 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 to an individual 401(k) ?
A)$51,000
B)$56,500
C)$74,287
D)$79,787

Question

Quizplus · Accepted Answer

Kathy is eligible to contribute the lesser of $56,500 or 100% of her net self-employment income, which is $400,000 - $100,000 = $300,000. Therefore, the maximum amount she can contribute to an individual 401(k) is $56,500.

Kathy Is 48 Years of Age and Self-Employed