**Retirement Contribution Guidance for Self-Employed Individuals****Case Study:**Harvey is a self-employed accountant with earned income from the business of $120,000 (after accounting for the deduction of one-half of his self-employment tax). He uses a defined contribution Keogh plan.**Question:**What is the maximum amount Harvey can contribute to his retirement plan in 2020?**Explanation:**This scenario illustrates how self-employed individuals like Harvey can maximize their retirement contributions using a Keogh plan. The amount he can contribute depends on specific rules governing self-employed retirement plans, allowing for significant tax-deferred growth for retirement savings. **Note:**Understanding the interplay between self-employment income and tax deductions is crucial to optimizing retirement contributions.

Calculation of maximum amount Havey can contributed to his retirement plan are as follows

Answered: LO.6 Harvey is a self-employed…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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LO.6 Harvey is a self-employed accountant with earned income from the business of $120,000 (after the deduction for one-half of his self-employment tax). He uses a defined contribution Keogh plan. What is the maximum amount Harvey can contribute to his retirement plan in 2020?