Operates a landscaping business and is self-employed

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Reference no: EM132031808

1. Martin is interested in contributing to a SEP IRA for 2018 and wants to know which of the following employees he would have to make a SEP IRA contribution for if he chooses to make one for himself:

a. Sarah, a 24-year-old employee who celebrated her first year of service with the company on 12/31/17; she earned $5,000 in 2017 and will earn the same amount in 2018.

b. Gabe, a 35-year-old employee who has been with the company for 10 years and earned $30,000 each year. He will also earn $30,000 in 2018.

c. Katie, an 18-year-old who joined the company in 2017 as a part-time employee. She earned $550 in 2017 and will earn the same amount in 2018.

d. Kip, a 40-year-old who joined the company on 1/1/2017 at an annual salary of $50,000. He received a 1% inflation adjustment for 2017 and 2018.

2. Nick, who is age 55, operates a landscaping business and is self-employed. He has an assistant, Louis (age 30), who has worked with him for five years, earning about $10,000 per year. Nick is establishing a SEP IRA for 2018 and is willing to make a contribution of 15% of Louis’s salary to the SEP IRA. If Nick earns $100,000 after paying Louis, his expenses, and the contribution to Louis’s SEP IRA (i.e., Net Schedule C Income), what is the most that Nick can contribute to the SEP IRA for himself?

a) $12,119.

b) $15,000.

c) $18,587.

d) $20,000.

e) $24,500

f) $25,000.

Reference no: EM132031808

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