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Finance Dictionary and Glossary of Investment Terms
A federally approved, defined-contribution retirement program that permits small-business owners and self-employed workers to set aside savings on a tax-deferred basis. Keogh plans have higher savings limits and more administrative requirements than other plans commonly available to these folks.
A type of pension account in which taxes are deferred. Available to those who are self-employed.
A Keogh works like the typical corporate-defined benefit or profit-sharing plans, but is specifically for non-incorporated businesses. Basically, you can sock away up to 25% of your after-tax earnings for up to $30,000 a year. There are, however, a few drawbacks. First, if you have employees, the percentage you elect for yourself has to be used for all other employees who qualify. Second, as the employer, you make all the contributions and you make all the investment decisions. The good news is that just as with corporate plans, deferred vesting is allowed so that you can require employees to work for up to three years before they are covered. Perhaps even better news is that if you are participating in another retirement plan, you can still set up a Keogh.
A tax-deferred qualified retirement plan for self-employed individuals and unincorporated businesses. also called self-employed pension.
A defined-benefit plan or defined-contribution plan established by a self-employed individual for him/herself and his/her employees.