Which of the following statements is correct?
A)Contributions to SEP plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the SEP deduction) or $45,000.
B)The contribution limits for SEPs are the lesser of 25 percent of net self-employment income after the deduction for the contribution to the SEP or $56,000 for a self-employed taxpayer.
C)Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $55,000.
D)The contribution limits for SEPs are a maximum of $19,000 ($25,000 for taxpayers 50 or older).

Question

Quizplus · Accepted Answer

Contributions to SEP plans by self-employed taxpayers are generally limited to 25 percent of net self-employment income after the deduction for the contribution to the SEP or $56,000 for a self-employed taxpayer. Option A is incorrect because it is an outdated contribution limit. Option C refers to the contribution limits for 401(k) plans, not SEPs. Option D refers to the contribution limits for individual taxpayers, not self-employed taxpayers specifically.

Which of the Following Statements Is Correct