Keogh plan

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Keogh plan

A type of pension account in which taxes are deferred. Available to those who are self-employed.

Keogh Plan

An account into which a self-employed person makes contributions up to a certain limit throughout his/her working life, and from which he/she begins to take distributions following retirement. Under a Keogh plan, contributions are tax deductible and withdrawals are taxed. The limit on annual contributions to a Keogh plan varies each year and is indexed to inflation, but in any case, it is higher than the limit for an IRA or a 401(k). Contributions to Keogh plans are invested in securities and usually own common stock and certificates of deposit.

Keogh plan

A federally approved retirement program that permits self-employed individuals to set aside for savings up to a specified amount. All contributions and income earned by the account are tax deferred until withdrawals are made during retirement. Investment opportunities include certificates of deposit, mutual funds, and self-directed brokerage accounts.

Keogh plan.

A group of qualified retirement plans, including profit sharing plans, money purchase defined contribution plans, and a defined benefit plan, is available to self-employed people, small-business owners, and partners in companies that file an IRS Schedule K, among others.

Together these plans are sometimes described as Keogh plans in honor of Eugene Keogh, a US representative from Brooklyn, NY, who was a force behind their creation in 1963.

The employer, not the employee, makes the contributions to Keogh plans, but the employee typically chooses the way the contributions are invested.

Like other qualified plans, there are contribution limits, though they are substantially higher than with either 401(k)s or individual retirement plans, and on a par with contribution limits for a simplified employee pension plan (SEP).

Any earnings in an employee's account accumulate tax deferred, and withdrawals from the account are taxed at regular income tax rates.

If you participate in a Keogh plan, a 10% federal tax penalty applies to withdrawals you take before you turn 59 1/2, and minimum required distributions (MRD) must begin by April 1 of the year following the year that you turn 70 1/2 unless you're still working. In that case, you can postpone MRDs until April 1 of the year following the year you actually retire.

The only exception -- and it is more common here than in other retirement plans -- is if you own more than 5% of the company. If you leave your job or retire, you can roll over your account value to an individual retirement account (IRA).

If you're eligible to establish a qualified retirement plan, a Keogh may be attractive because there are several ways to structure the plan, you may be able to shelter more money than with other plans by electing the defined benefit alternative, and you have more control in establishing which employees qualify for the plan.

But the reporting requirements can be complex, making it wise to have professional help in setting up and administering a plan.

Keogh Plan

Under prior law, a Keogh plan was a retirement plan set up for a self-employed taxpayer. The rules that applied to self-employed taxpayers differed from those that applied to common-law employees. Under current law, self-employed individuals are subject to the same rules as common-law employees.
References in periodicals archive ?
Sgt O'Sullivan said Keogh was brought to Clondalkin Garda station where he was charged at 3.
Keogh took the other four wickets to finish with 13 for 125 - the best figures by a Northamptonshire player for 40 years - as their opponents were skittled for 132.
Out of contract at Carlisle, Keogh was snapped up by Coventry City in 2010 and installed as captain.
PERFECT PRESENT Pat Keogh with son Finn and the shirt
Keogh says his departure from Eqecat was "very amicable," and there has been "an orderly transition of leadership.
But Derby appear to be in the driving seat, especially as they could offer the captaincy to Keogh following Jason Shackell's transfer to Burnley and the knee injury that will sideline Shaun Barker for the whole of the season.
Keogh has held his current position for four years and was previously finance director for Coolmore Stud for seven years.
Keogh rose above a static Paul Scharner to glance Nenad Milijas' left-winfree-kick past Chris Kirkland and in off the woodwork.
Keogh, of Lyme Cross Road, Huyton, was jailed for life on Friday after being unanimously convicted of murdering the fatherof-three.
During the trial Keogh told the court how he had developed feelings for Mrs Monteith in June 2007.
Baby potatoes are a popular product in the Irish market and Irish potato growing and packing company Peter Keogh & Sons was looking for an innovative solution that makes its potatoes stand out from the crowd.