Problem $11-55($LO $11-2)$

Ken is a self$-$employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom has worked for Ken full$-$time for the last four years. The office assistant earns $$30,000$ per year, and each drafter earns $$40,000.$ Ken' earnings from self$-$employment $($after deducting all expenses and one$-$half of self$-$employment taxes$)$ are $$380,000.$ Ken is consid whether to establish a SEP plan and has a few questions. Assume that all the employees are at least $21$ years old.

Required:

a$.$ Is he eligible to establish a SEP plan?

$$

Prev

$2$ of $6$

Neat

$30$ok

$$nt

rences

b$.$ Is he required to cover his employees under the plan?

Prev

$2$ of $6$

Negrt

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c$.$ If his employees must be covered, what is the maximum amount that can be contributed on their behalf?

Book

Lesser of $$66,000$ or $25\%$ of employee earnings

d$.$ If the employees are not covered, what is the maximum amount Ken can contribute for himself?

Prev

$2$ of $6$

Next

Search

Greater of $$66,000$ or $25\%$ of employes earnings

lesser of $$66,000$ or $75\%$ of employee earnings

No contribution as Ken is not qualified to have a sip Man

Only $$66,000$

Maxminen contritution $5$

Pros

$2$ at $6$