What is a profit-sharing Keogh plan?
A Keogh retirement plan is a qualified plan for an unincorporated business. If you have employees and open a Keogh for yourself, you must also offer a Keogh plan to your workers and contribute to their accounts as well. The simplest — and, therefore, most common — type of Keogh plan is the profit-sharing Keogh. The employer can contribute up to 15% of participants earnings under this plan. The maximum for any individual is $40,000, or 25% of compensation. The employer must contribute an equal percentage of his or her employees salary to their individual accounts. The maximum percentage the employer may contribute to his own account is 13.04%. No minimum amount must be contributed each year, which allows the employer to make the maximum contribution in good years and little or no contribution in lean ones. Money inside the account grows tax-deferred until it is withdrawn. A 10% penalty, in addition to taxes, is levied if withdrawals are made before you turn 59 1/2. Keogh assets also c
