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Keogh Plan

Definition of Keogh Plan

A group of qualified retirement plans, including profit sharing plans, money purchase defined contribution plans, and a defined benefit plan, is available to self-employed people, small-business owners, and partners in companies that file an IRS Schedule K, among others. Together these plans are sometimes described as Keogh plans in honor of Eugene Keogh, a US representative from Brooklyn, NY, who was a force behind their creation in 1963. The employer, not the employee, makes the contributions to Keogh plans, but the employee typically chooses the way the contributions are invested. Like other qualified plans, there are contribution limits, though they are substantially higher than with either 401(k)s or individual retirement plans, and on a par with contribution limits for a simplified employee pension plan (SEP). Any earnings in an employeeÔÇÖs account accumulate tax deferred, and withdrawals from the account are taxed at regular income tax rates. If you participate in a Keogh plan, a 10% federal tax penalty applies to withdrawals you take before you turn 59 1/2, and minimum required distributions (MRD) must begin by April 1 of the year following the year that you turn 70 1/2 unless youÔÇÖre still working. In that case, you can postpone MRDs until April 1 of the year following the year you actually retire. The only exception ÔÇö and it is more common here than in other retirement plans ÔÇö is if you own more than 5% of the company. If you leave your job or retire, you can roll over your account value to an individual retirement account (IRA). If youÔÇÖre eligible to establish a qualified retirement plan, a Keogh may be attractive because there are several ways to structure the plan, you may be able to shelter more money than with other plans by electing the defined benefit alternative, and you have more control in establishing which employees qualify for the plan. But the reporting requirements can be complex, making it wise to have professional help in setting up and administering a plan.

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Financial Dictionary

What is Financial Dictionary?

Financial Dictionary is a dictionary or database that contains the meaning of all financial terms. Financial Dictionary has been created to help anyone, interested in understanding financial terms. It is extremely important to know what the financial terms mean when signing on terms and conditions. When availing financial products, you can be easily cheated if you don’t know what you have signed up for. To avoid this, you must be aware on what the terms really mean.

 

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We have developed this Financial Dictionary that could be used by anyone for free on our website. We have provided the meanings of almost all the financial terms along with the context in which they can be used. If you have lingering doubts on any financial term, then all you must do is log on to our website and check out the Financial Dictionary.

 

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If you wish to invest in the stock market, then it is extremely important to understand each and every term associated with it. A small misunderstanding can lead to huge losses in a matter of few seconds. It is only wise to know the meaning of all the terms before investing. The most comprehensive Financial dictionary covering all the financial terms. Brought to you by India's largest Free Financial Education company - IndianMoney.com.

 

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If you are planning to avail a Home Loan, then it is crucial for you to understand under what conditions your bank is sanctioning the loan. You must understand each and every term written on the loan agreement or else you will end up choosing a lender who charges high interest or with tough terms and conditions. To avoid this, just log on to our website and understand the meaning of financial terms with the Financial Dictionary.

 

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If you want to invest in a financial product, you must understand various financial terms. Not doing this could mean losses. Many financial intermediaries misguide you to make quick profits. You can avoid this by understanding financial terms and make smart investment decisions.

 

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