Problem $5-11$

Small Business and Self$-$Employed Retirement Plans $($LO $5\mathrm{.}4)$

Eligio is a $45-$year$-$old self$-$employed psychiatrist who has net earned income of $$320,000$ in $2023.$ What is the maximum amount he can contribute to his SEP for the year?

$ $q,$

Feedback

VCheck 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.