Question

Kathy is 48 years of age and self-employed. During 2018 she reported $108,000 of revenues and $43,200 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)

Answer 1

According (employee/owner both) is limited to 25 percent of profit minus the SEP contribution subject to maximum of $55,000 (for 2018) to the Rules for SEP IRAS the contribution made by the sole proprietor Compute SEP IRAS contribution limit as follows: Amount (S) $108,000 $43,200 $64,800 Particulars Total revenue Less: expenses Profit before contribution for SEP IRAS Maximum contribution will be lower of 1) Prescribed limit 2) ($64,800 25/125) Maximum amount of contribution can be: $55,000 $12,960 $12,960 Therefore, the maximum amount of contribution can be S12,960|