KEOGH Plan information

[Guest MAP]

Could someone lead me to some sources describing the fundamentals of KEOGH plans? They are a new pension plan creature to me and I am looking to understand how they are similar and different from other qualified plans. Alternatively, prehaps you could give me the name/address of a company which offers a M/P KEOGH plans? Thanks.

[wmyer]

A KEOGH plan is simply a qualified plan for sole-proprietors or partners, as opposed to a qualified plan for corporations. It can be either a defined contribution plan or a defined benefit plan.

[Kirk Maldonado]

Check out BNA Tax Management Portfolio #353 - Owner-Dominated Plans and H.R. 10 Plans.

P.S. I am not affiliated with BNA Tax Management

[Kristina]

At one time, Keough plans had more restrictions on them than corporate plans had. Under the rule of parity (TEFRA '82 I believe), sole proprietor sponsored plans follow the same rules as corporate plans. Therefore, even though there are those who reference Keough plans (named for the senator/representative who sponsored the original bill allowing sole proprietors to have qualified plans), they, in effect, no longer exist as separate plan types. When someone refers to a Keough plan, you know they have been around the qualified plan field for at least 18 years.

[Larry M]

sole proprietor (nee Keogh) plans almost follow the same rules as corporate plans. There are some significant differences - for example - loans.

[richard]

Other differences ...

"Pay" for the purpose of the qualified plan is generally compensation AFTER deduction of the pension contribution, adjusted for FICA contribuiton. For a sole prop, an owner's "pay" for this purpose is the bottom number of 1040 Schedule C minus the pension contribution, minus a FICA adjustment.

Also, note that for a sole prop, the pension contribution for the onwer is subject to FICA.

[Guest Barney Byrd]

Responding to MAP: Although not as good as the BNA reference cited above, if you're looking for a free source of general information about Keogh plans, go to the IRS web site at http://www.irs.gov and view or download Publication 560. Also, if you're in the market to establish a Keogh plan for calendar year 2000, IRS Revenue Ruling 69-231 requires the plan be established no later than the close of your tax year, which would fall on 12/29/2000 this year. The deadline for funding the plan is generally the due date of your tax return, plus extensions. However, if you take an extension until 10/15/2001, you may be liable for an excise tax if you fund the plan after 09/15/2001.