Keogh Retirement Plan Rules vs Other Retirement Plans
The rules with a Keogh retirement plan may offer more advantages when compared with other types of retirement plans. Early retirement planning should include evaluating the different types of retirement accounts available, and then deciding which plan type works best with your circumstances and situation. One benefit is that these plans can be very effective tax shelters, because the interest you earn and contributions you make are not taxed until you receive withdrawals from the plan. The income received from a Keogh retirement plan will be taxed as ordinary income, which often means a lower tax rate as well. The contribution limits are normally higher with this plan than others because you can contribute twice, once as an employee and once as an employer.
Retirement plans for self employed individuals can be simple or complex, and a Keogh account can be time consuming and extensive to set up. There is significant documentation required, and professional assistance may be required by many individuals and small business owners to handle this step. A Keogh retirement plan requires a written plan component, and any employees of the business must be notified in writing of the plan and be allowed to participate if desired. Roth IRA eligibility may not include some of these requirements and restrictions, and may involve an easier plan set up.
A retirement savings calculator can show you the amount you will need to save before you retire, but not which plan will work best to meet your retirement goals. When comparing a Keogh retirement plan
with the other options that you have available there are a number of factors to consider. A careful evaluation of the benefits and drawbacks of each retirement plan needs to be examined carefully. This will make your retirement planning much more effective, and ensure that you choose the plan that best fits your needs and objectives.