Problem 4-17 Employee Pensions (LO 4.7) Tony is a 45-year-old self-employed psyc
ID: 2342991 • Letter: P
Question
Problem 4-17
Employee Pensions (LO 4.7)
Tony is a 45-year-old self-employed psychiatrist who has net earned income of $300,000 in 2017. What is the maximum amount he can contribute to his SEP for the year?
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Problem 4-20
Rollovers (LO 4.9)
Telly, age 38, has a $140,000 IRA with Blue Mutual Fund. He has read good things about the management of Green Mutual Fund, so he opens a Green Fund IRA. Telly asked for and received his balance from the Blue Fund on May 1, 2017.
a. What is the total amount Telly will receive from the Blue Fund IRA?
Explanation / Answer
4-17
Self-employed sep contribution is limited to the lesser of (1)54,000 or (2) 25% of net earned income.
25% of net earned income = 300000*25% = 75000
THus, maximum contribution = 54,000
4-20
It is roll over from an IRA to another IRA, no taxes are withheld.
Thus, the amount received is 140,000
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