For each taxpayer, compute the maximum contribution to the retirement plan. a. Lewis, a self-employed individual, has net earned income of $50,000 in 2019. If Lewis has no employees, calculate the maximum contribution to a SEP plan that he may deduct from his adjusted gross income. 9,235 X b. During 2019, Linda, age 32, has a salary of $40,000. She participates in a Section 401(k) plan and chooses to defer 25 percent of her compensation. What is the maximum amount Linda can contribute to the Section 401(k) plan on a tax-deferred basis? 10,000 V If Linda's salary was $125,000, instead of $40,000, what is the maximum amount that she could contribute to the Section 401(k) plan on a tax- deferred basis? 18,500 x Feebook Check 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 Participants in SEPS must meet requirements for minimum age and years of service. An employer must cover employees if the employees meet the requirements for coverage. SEP contributions and deductions are limited under different rules for employees versus the self-employed business owner One of the more popular qualified retirement plans is the Section 401(k) plan, which permits an employee to choose to receive a direct payment of compensation in cash or to defer the amount through an employer contribution on behalf of the employee to a profit sharing or stock bonus plan. In all 401(k) plans, contributions are limited in two ways