Steve Colburn earned $250,000 in his sole proprietorship. 1. What is the maximum amount that Steve...

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Steve Colburn earned $250,000 in his sole proprietorship. 1. What is the maximum amount that Steve...

Steve Colburn earned $250,000 in his sole proprietorship.

1. What is the maximum amount that Steve may contribute and deduct if his plan is a SIMPLE IRA?

2. What is the maximum amount that Steve may contribute and deduct if his plan is a Solo 401(k)?

3. What is the maximum amount that Steve may contribute and deduct if his plan is a SEP IRA?

business accounting

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Answer 1

Answer #1

calculation of earned income

net earning of Steve Colburn	$25,00,000
1402(a)(12) [email protected]%	$230875.00
medicare and FICA	$23174.98
self employment tax(23174.98/2)	$11587.49
self employment income	$238412.51

Maximum contributions

a)	maximum simple IRA contribution	$19944.05
b)	maximum 401(k) contribution	$19000.00
c)	maximum SEP IRA contribution	$47682.50

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Answer 2

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