If you are, you could benefit from a Keogh retirement plan. Like the retirement plans you see in major corporations, Keogh plans offer coverage to both you and your staff. In fact, if you establish such a retirement program for yourself, you must offer it to your employees.
Fortunately, your plan can be altered to fit your needs a qualified retirement planning attorney can help you map out the best plan for you.
Your plan must be in writing and communicated to all your employees. Your contribution amount will depend on whether your account is a defined-benefit or defined-contribution plan. Defined benefit plans set forth an expected payout amount in the future while defined contribution plans are kept in separate accounts for each employee and invested.
The payout amount is uncertain and will depend on market fluctuation. Your Keogh plan can even allow your employees to make non-tax deductible contributions along with your contributions. One benefit to this is that any earnings made on employee contributions are tax free until the employee withdraws.
Taxation for a Keogh plan is also fairly straightforward. Withdrawals will be taxed as income and like many other retirement plans, there are tax penalties for early withdrawals.
Keogh plans offer even part-time self-employed persons the ability to create a smart retirement vehicle for their company however, the paperwork associated with this type of plan can be a little daunting and each year you must file an annual report with the IRS. To assist with this matter and with the set-up of your Keogh plan, you may wish to seek professional advice.