KEOGHS AND TAXES
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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
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
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.