Question

In 2020, a self-employed person earning $100,000, who also has $100,000 of investment income, wishes to open a Keogh Plan. Their maximum permitted contribution is:

Answer 1

$20,000

Step-by-step explanation:

Calculation for the maximum permitted contribution of Keogh Plan.

Based on the information given the maximum permitted contribution for Keogh Plan will be based only on their personal service income and wont be based on their investment income.

Based on this let find the maximum permitted contribution for Keogh Plan

$100,000 *20% Effective contribution rate = $20,000

Therefore their maximum permitted contribution is: $20,000