Kathy is 60 years of age and self-employed. During 2018 she reported $500,000 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 a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)
A) $55,000.
B) $61,000.
C) $77,337.
D) $369,400.

Question

Quizplus · Accepted Answer

Her maximum contribution is the lesser of (1) $55,000 or (2) $77,337 [20% × ($400,000 − [((400,000 × 0.9235 -128,400) × 2.9% × 50%) + (128,400 × 0.153 × 50%)])].

Kathy Is 60 Years of Age and Self-Employed