What is the KEOGH plan?

With all 401pcs and IRA, many owners of small businesses are left in the dark in terms of the establishment of a pension savings fund for yourself Andor's employees. With regard to the owners of a small company, the Keogh plan, sometimes known as the HR10 plan, was designed. This postponed delayed tax delayed in 1963 is for the first time available for owners or owners of an unloaded business and its employees. Because the contributions are deducted from gross income, one of the advantages of the plan is to reduce revenue before tax. Other advantages of the KEOGH plan include contributions that are postponed taxes until they are withdrawn, postponed interest income, certain lump -sum benefits that are capable of diametering 10 years and contributions higher than IRA.

As with all pension savings plans, the Keogh plans have timely collection if the participant is more than 5% of the owner and the payments must start within 1 April of the year when the participant turns 70.retirement.

There are two types of savings plans within the Keogh plan: a plan of defined benefits and a plan of a defined post. With a plan defined by the participant, the participant defines how much he wants to retire after retirement. Using this number, it was contributed to the calculation of a percentage based on the life length of the participant, the required amount and the number of years remaining to contribute before retirement. With the defined contribution, the participant chooses how much he wants to contribute to the Keogh plan annually.

There are two ways to contribute to the plan: a profit sharing plan and a purchase plan. With a profit sharing plan, the contribution is dependent up to the UPON profits from the business. One of the advantages of this type of plan for the owner is that the law allows you to skip posts during lean years. The Purchase Plan for Money is contributed each year by the specified amount without contributions for profits or losingyou. For both types of plans defined posts, the maximum deduction limit is 25%.

KEOGH Plan requires that the contributions be provided in cash, but can be invested in different ways. Assets are held in employees' trust and can be reversed to the IRA if they leave the company. The big advantage for the company's owners is that it can deduct the entire annual benefit of Keogh to themselves and for those created for their employees.