Which of the Following Statements Is Correct

question 5

Multiple Choice

Which of the following statements is correct?

• A)Contributions to SEP plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the SEP deduction) or $45,000.
• B)The contribution limits for SEPs are the lesser of 25 percent of net self-employment income after the deduction for the contribution to the SEP or $56,000 for a self-employed taxpayer.
• C)Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $55,000.
• D)The contribution limits for SEPs are a maximum of $19,000 ($25,000 for taxpayers 50 or older).

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Definitions:

Salvage Value

The calculated leftover value of an asset at the termination of its useful period.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.

Internal Rate

Typically refers to the Internal Rate of Return (IRR), a financial metric used to estimate the profitability of potential investments.

Payback Period

The length of time it takes for an investment to generate enough cash flow to recover its initial cost.