SEP/IRA contributions

WHICH ONE IS CORRECT RE:  MAXIMUM 2022 SEP IRA CONTRIBUTION?

Note:  Same facts as above:  Sole Prop. and No EE's.

$5,424 OR $6,781

Per TD Ameritrade:

Step One: Estimate Earned Income

A: Estimated Self-Employment Earnings, Minus Estimated Deduction for Contributions to Non-Owner Employees2

B: Estimated Deduction for ½ Self-Employment Tax

C: Contribution Percentage

Step Two: Calculate Estimated Contribution

Estimated Earned Income1   X   Contribution Percentage = Estimated Contribution

Calculation:

Step One: Estimate Earned Income

A: $29,184

B: $2,062

C: .25

Step Two: Calculate Estimated Contribution

Estimated Earned Income1   X   Contribution Percentage = Estimated Contribution

$21,698 X .25   =   $5,424*

*The maximum contribution for purposes of contributing to a SEP plan for 2022 is the lesser of the result above or $61,000.

ANOTHER CALCULATION:  Don't recall the source:

2022 SEP Calculation:

  Est Net Sch C Income - $29,184

  Less:  1/2 SE Tax               -2,062

    Net                                   27,122

  Allowable Lesser of 25% of Adj Net Sch C - $27,122 or $61k.

  25% of $27,122 = $6,781.