Keogh Plan

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Keogh Plan

Keogh Plan means:
a tax-deferred pension account designated for employees of unincorporated businesses or for persons who are self- employed either full or part time. For a defined-contribution Keogh plan, a person may contribute the lesser of $30,000 or 20% of self-employment income. A defined-contribution profit-sharing Keogh plan has a 13-043%.

deduction limitation. The limit for a defined-benefit Keogh plan is the smaller of $118,800 in 1994 (indexed yearly) or 100% of the employee's average compensation for the highest of 3 years of employment. Former IRC (check if this IRC provision is current here) §401 (c).

Also known as an H.R. 10 plan, this is a retirement plan for the self-employed. As much as 20 percent of his or her net earnings from self-employment income (up to $49,000 in 2010 and 2011) can be deposited in a Keogh, and contributions can be deducted. For taxpayers age 50 and older, the limits are $5,000 higher. There is no tax on the earnings until the money is withdrawn, and there are restrictions on tapping the account before age 59 _.

Description and Definition of Keogh Plan

A pension or profit-sharing plan available to self-employed individuals and their employees providing tax-deductible contributions and tax deferred income accumulations until withdrawal. Also known as an H.R. 10 plan, as much as 20% of self-employment income can be deposited into a Keogh. There are restrictions on withdrawals from the account prior to age 59-1/2.


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