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  Tuesday November 21, 2017

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KEOGHS AND TAXES
Learn even more about this topic with the Encyclopedia of Personal Finance™

You may defer income taxes on any money you put into a Keogh plan. The interest, dividends, and capital gains you earn on your Keogh money also grow tax-deferred.

You will pay taxes on your Keogh money when you withdraw it. You must begin withdrawing funds from your Keogh by April 1 of the year after you turn age 70½. The amount you are taxed depends on how you withdraw your money. Funds taken out are taxed at regular income tax rates. If you choose to take your Keogh money in one lump payment, you may be eligible for income averaging.

Contributions to a Keogh are made pre-tax, which reduces your taxable income. If you are the owner of a self-employed business, you can deduct the entire amount of your yearly Keogh contribution (including contributions made on your employees' behalf). If you are a partner in a self-employed business, you can deduct the amount contributed by the partnership on the partner's behalf.

Before you enjoy the tax benefits of your Keogh plan, you must first make sure that you are eligible to open up a Keogh.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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