Keogh Plan FAQs
What is a Keogh plan?
A Keogh plan is a tax-deferred retirement plan for self-employed individuals and small businesses. It allows participants to make contributions toward their retirement savings while benefiting from tax advantages.
Who qualifies to set up a Keogh plan?
Keogh plans are available to self-employed individuals, sole proprietors, and partnerships. To qualify, you must have self-employment income or own a small business.
What are the contribution limits for Keogh plans?
For 2024, the contribution limit for a Keogh plan is the lesser of 25% of compensation or $66,000. Contribution limits depend on the plan type, such as defined contribution or defined benefit.
How do Keogh plans differ from SEP IRAs?
Keogh plans have more complex administration and higher setup costs compared to SEP IRAs. However, they offer higher contribution limits for certain types of businesses and include both defined benefit and defined contribution plan options.
Can Keogh plans be rolled into other retirement accounts?
Yes, funds from a Keogh plan can be rolled into other qualified retirement accounts, such as IRAs or 401(k)s, as long as IRS rules are followed to avoid taxes and penalties.