Retirement Plan Tax Rules, Part 2
What's a KEOGH retirement plan?
April 22, 2003
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A KEOGH retirement plan can be set up by self-employed
individuals and does not require advanced IRS approval. There are
two types of KEOGH plans available. One is defined-benefit, which
allows participants to contribute a maximum of the lesser of either
100 percent of their average compensation for the three consecutive
years of highest compensation as an active participant, or
$160,000. Then there's defined contribution, which allows for
contributions of up to $40,000 for either a profit-sharing defined
contribution plan or a money-purchase plan. The deadline for
setting up a KEOGH plan is the end of the tax year (December 31),
and the deadline for making contributions to the KEOGH plan is the
same as the SEP--the due date for your Form 1040 individual tax
return (including extensions). Source: "Selecting
the Right Retirement Plan"
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