Keogh Plan: Secrets Unlocked for You

3 minutes

Photo courtesy of wisegeek.com
Photo courtesy of wisegeek.com

What in the world is a Keogh Plan?

According to Investopedia. A Keogh plan is a tax-deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.

A Keogh plan can be set up as a defined-benefit plan or defined-contribution plan, although most plans are set-up as a defined-contribution plan.

More on this later. The Keogh plan was initiated in 1962 and was the invention of a New York congressman named Eugene Keogh. Prior to 2001, they were very popular but due to changes in the tax system they were replaced by the SEP IRA, which has the same contribution limits and much less paperwork. Always a good thing.

So, how can this plan help me?

So who can set up a Keogh plan? Any self-employed individuals or any small business that is a sole proprietorship, partnership, or LLC.

This type of plan is a perfect choice for high-income earners.

Typically the Keogh is funded by the employer.

The Keogh comes in two kinds of flavors.

Defined contribution: these types of plans have two variations. Profit sharing and money purchase. The profit sharing version is most like a SEP, there is a ceiling on contributions. 25% of contributions or $53,000 in 2016. Below these limits you can contribute up to. With the money purchase plan, you can choose the percent you would like to contribute each year. And stick with it, if you don’t the IRS will become your best buddy. Not! Penalty for you.

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Simple IRA: 10 Valuable Benefits

6 minutes

What the heck is a Simple IRA?

Picture courtesy of nextgenerationtrust.com
Picture courtesy of nextgenerationtrust.com

The SIMPLE IRA is an acronym for Savings Incentive Match Plan for Employees. This plan allows employees and employers to contribute to a Traditional IRA which is set up for employees.

The ideal use of the SIMPLE IRA is for start-up retirement savings plans for small employers not currently offering any sort of retirement plan.

I’ve touched on these statistics before but did you know that:

  • the average 50-year-old only has $42,797 saved.
  • 45% of Americans having nothing saved.
  • 38% don’t actively save for retirement at all.
  • 20% of Americans tap into their 401k savings early, either thru a loan or early withdrawal
  • 80% believe they will not have enough savings when they retire.

These numbers scare the crap out of me and that is why we are here talking about this subject.

If I can make the difference with just one person my mission will be complete.

This is why we are talking about all the different retirement plans out there so you have some ideas of which would be the best fit for you. And how they could help you.

Benefits of a SIMPLE IRA

1. Very easy to setup.

A Simple IRA is very easy to setup and is ideal for the small business that wants to offer a retirement plan for their employees.

There are no start-up costs and no operating costs of a conventional retirement plan.

It is available to any small business with less than 100 employees. And it is easily established by filling out a few forms. These forms are available at IRS.gov.

There are no filing requirements for the employer, but keep in mind that they may not have any other retirement plan currently setup.

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