Daily Gains Letter

Keogh Plan

Keogh Plans are a type of retirement plan for self-employed individuals and small businesses in the United States.  Like other investment plans, a Keogh is a private retirement plan that is meant to supplement pension and Social Security.

Self employed Americans can contribute to a Keogh Plan even if they are self employed on a part time basis.  If an individual runs more than one business, they need to set up a Keogh plans for all of them…and must make contributions to all of them.

There are some restrictions.  Income earned overseas is not considered self-employment income. An inactive owner in a business is also excluded from contributing to a Keogh plan.

Contributions to Keogh retirement plans are tax-deferred, meaning the earnings grow tax-free until withdrawn.  But the main benefit of a Keogh plan is that it has higher contribution limits, and is best suited for high income earners.