Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2016).

Question:

Rita is a self-employed taxpayer who turns 39 years old at the end of the year

(2016). In 2016, her net Schedule C income was $300,000. This was her only source of income. This year, Rita is considering setting up a retirement plan.

What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations?

a) She sets up a SEP IRA.

b) She sets up an individual 401(k).

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