Established by the US Congress in 1962, the the Keogh plan (named after US Representative James Keogh of New York) is a qualified retirement plan. It is also known as an H.R. 10 plan. It is not an IRA (Individual Retirement Account).
A sole proprietor or a partnership can set up one of these plans. A common-law employee or a partner cannot set up one of these plans.
Contributions and withdrawals
Similar to other qualified retirement plans, funds can be accessed as early as 59 1/2 and withdrawals must begin by age 70 1/2.
Contributions are tax-deferred until age 59 1/2. Distributions must occur at age 70 1/2.
The maximum amount that can be contributed generally changes each year. A person who is employed but who also receives self-employment income is eligible to open up a Keogh plan. The IRS requires that employees under a Keogh plan be at least 21, be full-time, and have worked for at least one year.
(Employer perspective) Keoghs are known to have more administrative burdens and higher upkeep costs than Simplified Employee Pension (SEP) plans, but the contribution limits are higher, making Keoghs a popular option for many business owners and proprietors.
- IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
- Keogh Plan, on Investopedia
- Keogh Plans vs. SEP-IRAs, from New York Life
- Publication 560, Retirement Plans for Small Business, from the IRS.
- Keogh Plan, on Wikipedia
- Keogh Plan, on Investopedia.com
- Keogh Plan, on InvestorGlossary.com
- Definitions of Keogh Plan, on Google