401(k) and Keogh Plan

[Guest mbg76]

If an individual is participating in his employer's 401(k) plan but also has legitimate self-employment income from other activities, does anything bar that person from setting up a Keogh plan for the self-employment income?

[Below Ground]

Provided that there is no controlled group issue, simply stated, go for it. Just keep in mind that the IRC 402(g) Limit (maximum deferral) is an individual limit that applies to all plans a person may be in. IRC 415 Limits are not.

[rcline46]

I love this one - THERE AIN'T NO SUCH THING AS A KEOGH PLAN ANYMORE! They had special rules which do not apply since 1983. Its been 24 years, get over it already!

[TLGeer]

I love this one - THERE AIN'T NO SUCH THING AS A KEOGH PLAN ANYMORE! They had special rules which do not apply since 1983. Its been 24 years, get over it already!

1-If the plan is for a Schedule C or other wholly owned business, without employees, you never have to use 402(g), because you can structure the contributions as discretionary contributions to a profit sharing plan.

2-The specifically Keogh plan terminology is a little out of date. However, the rules making the proprietor be deemed an employee and defining compensation still exist. What happened was that most of the disadvantages of Keogh plan status were removed. Calling it a "Solo-K" doesn't change what it is, a plan covering self-employed.

rcline46, your post ws completely inappropriate, and, frankly, wrong. Plus, and I hope I speak for more than myself, these Boards are not about being or acting up to date or hip, however you choose to define those terms.

Tom Geer

[Lori Friedman]

THERE AIN'T NO SUCH THING AS A KEOGH PLAN ANYMORE!

I know that this is a pet peeve of some practitioners. But, there's still some authority to use the term "Keogh" -- the regulations to I.R.C. Sec. 401 refer specifically to Keogh plans. Of course, the term is also commonly used to describe qualified plans for self-employed individuals. Even though its technical meaning has changed significantly since the days when H.R. 10 was in force, the term continues to have validity.

Personally, I'm going to save my own pet peeves for things that really, truly matter. For example, being served whole-berry cranberry sauce, instead of that wonderful stuff that looks like the can.

[Guest mjb]

While several years ago the IRS formally stopped using the term keogh plan in line 28 on the 1040 permitting deductions for self employed and replaced it with a deduction for self employed SEP, SIMPLE and qualfied plan, it still exists in some tax regs and has one distinction in Q plans: the amount of the tax deduction is limited 20% of net earnings from self employment reduced by 50% of the FICA contribution.