Problem 5-10 (Algorithmic) Small Business and Self-Employed Retirement Plans (LO 5.4) During 2023, Pencho is a self-employed therapist, and his net earned income is $188,000 from his practice. Pencho's SEP-IRA Plan, a defined contribution plan, states that he will contribute the maximum amount allowable. Calculate Pencho's contribution. $ 61,000 X Feedback Check My Work A Simplified Employee Pension (SEP or SEP IRA) is a retirement plan available to any employer (including a self-employed individual). The amount of contributions can change from year-to-year and can be zero. However, the maximum contributions cannot exceed the lesser of a statutory percentage of the employee's compensation or an annual amount that is set each year by the IRS. Participants in SEPS must meet requirements for minimum age and years of service.