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) $12,000D) $55,000.

Question

Business

Leyla Garza

17 October, 22:34

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) $12,000D) $55,000.

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Answers (1)

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Kennedy Espinoza · Answer 1

Answer: The answer is D

Explanation:

The simplified employee pension (SEP) is a way in which an employer can provide for their own retirement and for that of their employees. For a self employed it is difficult to know the percentage of contribution of such self employed individuals to the simplified employee pension (SEP). But the rules that govern the contribution is that the maximum contribution made to the pension contribution cannot exceed 25% of total compensation. Since Kathy has no retirement account in her name, it will be difficult to know her percentage of contribution, however the rules says for 2018 the maximum she can contribute to a simplified employee pension (SEP) is $55,000