federal Tax

worked for Ken full-time for the last four years. The office assistant earns $30,000 per year and each drafter earns $40,000. Ken's net earnings from self-employment (after deducting all expenses and one-haif of self-employment taxes) are $310,000. Ken is considering whether to establish a SEP plan and has a few questions. Assume that all the employees are at least 21 years old. Required: 0. Is he eligible to establish a SEP plan? Yes No b. Is he required to cover his employees under the plan? Yes No c. If his employees must be covered, what is the maximum amount that can be contributed on their behalf? Lesser of $58,000 or 25% of employee earnings Greater of $58,000 or 25% of empioyee earnings Only 25% of employee eamings Only $58.000 No contribution as Ken is not qualified to have a SEP Plan d. if the employees are not covered, what is the maximum amount Ken can contribute for himself? c. If his employees must be covered, what is the maximum amount that can be contributed on their behalf? Lesser of $58,000 or 25% of employee earnings Greater of $58,000 or 25% of employee earnings Only 25% of employee earnings Only $58,000 No contribution as Ken is not qualified to have a SEP Plan d. If the employees are not covered, what is the maximum amount Ken can contribute for himself? Lesser of $58,000 or 25% of employee earnings Greater of $58,000 or 25% of employee earnings Only 25% of employee earnings Only $58.000 No contribution as Ken is not qualified to have a SEP Plan e. If Ken is required to contribute for his employees and chooses to contribute the maximum amount, what is the maximum amount Ken can contribute for himself? (Hint Calculate the employee amounts first) Ignore any changes in Ken's self employment tax