questio 17 **Kathy's 401(k) Contribution Calculation***Context:* Kathy is 60 years of age and self-employed. In 2023, she reported $504,000 of revenues and $100,800 of expenses for her self-employment activities. Kathy has no other retirement accounts. You are to determine the maximum amount she can contribute to an individual 401(k) for the year 2023, assuming she pays $30,597 in self-employment taxes for the year.**Calculation:**1. **Net Income from Self-Employment**: - Revenue: $504,000 - Expenses: $100,800 - Net Income: $504,000 - $100,800 = $403,2002. **Self-Employment Tax Deduction**: - Self-employment tax paid: $30,5973. **Maximum 401(k) Contribution Calculation**: - Kathy can contribute both as an employee and an employer. - **Employee Contribution Limit**: For 2023, Kathy, being over 50, can contribute up to $30,000 as a catch-up contribution. - **Employer Contribution**: - Based on net earnings from self-employment, reduced by half of her self-employment tax. - Net earnings considered for employer contribution: $403,200 - ($30,597 / 2) = $387,901.50 - Employer contributions can be up to 25% of this adjusted net earnings. - Calculate 25% of $387,901.50.**Note:** Round your final answer to the nearest whole number.**Multiple Choice Options:**- $100,080- $73,500- $66,000- $92,569Choose the correct contribution limit from the options above.

For the tax year 2023, the maximum contribution by self-employed as a profit sharing contribution is 25% of income compensation where, annual contribution limit is $66,000 where a catch-up of $7,500 is allowed if age of contributor is 50 or above.The maximum amount she can contribute to an individual 401(k) for 2023 is lessor of:(1) $66,000or(2) 25% of net earnings from self-employment + Salary deferrals (25% of (92.35% x ($504,000 - $108,000)) + $30,597) ($93,089 + $30,597) ($123,686)The lower of (1) and (2) is $66,000.In addion to this, as Kathy is 60 years old, an additional contribution of $7,500 can be made.Hence, the maximum amount she can contribute to an individual 401(k) for 2023 is $73,500 ($66,000 + $7,500).The maximum amount she can contribute to an individual 401(k) for 2023 is $73,500.