Kathy is 60 years of age and self-employed. During 2018 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 2018? (Round your final answer to the nearest whole number)
A) $11,152.
B) $17,152.
C) $61,000.
D) $55,000.

Question

Quizplus · Accepted Answer

Her maximum contribution is the lesser of (1) $55,000 or (2) $11,152 [($60,000 − (60,000 × 0.9235 × 0.153 × 0.50)) × 20%]. There is no catch-up contribution for taxpayers at least 50 years of age at the end of the year.

Kathy Is 60 Years of Age and Self-Employed