Question

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Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2019). In 2019, her net Schedule C income was $290,000. This was her only source of income. This year, Rita is considering setting up a retirement plan.

What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations to the nearest whole dollar amount.)

a. She sets up a SEP IRA.  

Maximum Contribution

b. She sets up an individual 401(k).
Maximum Contribution

Answer 1

Rita il a self-employed taxpayer who turns 39 years old at the end of the year 2019). In 2019, her net Schedule C income was $290000. (a) Maximum amount Rita may contribute to the self employed plan if she sets up SEP SRA is 25% of her earnings up to a maximum 44$550n. SEP IRA Contribution = 290000725% = $72.500 As the limit is s5000 ; she can contribute only $55000- 6) noaximum self employed amount Rita may contribute to the plan if she set up yoilks) is 20% of net self endould income upton marimun of $53000 contribution = 290000 20% 7 58000 As the limit is $58000 she can contribute only $ Bobo.