WHO IS ELIGIBLE FOR A KEOGH?
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Keogh plans are designed for sole proprietors, and
partners and their employees. Chances are, if you file a Schedule C
or E for your tax returns, you are eligible for a Keogh. If you own
a business or if you are a partner of a business that is not
incorporated, you can open a Keogh. It's not enough to just be an
owner, however; you must also perform personal services for the
company. If you are a limited or retired partner in a business, a
Keogh is not available to you.
If you own more than one unincorporated business,
you must open a Keogh for each business. You cannot have a Keogh
plan in one business but not the other. If you have a regular job
but you also earn self-employed income, you can still save through
a Keogh plan.
Self-employed ministers, consultants, or salespeople
(who work for outside vendors) are examples of professionals who
could open Keoghs. Salaried persons who work for corporations,
however, would not be eligible unless they received income from
The amount you can contribute to a Keogh depends on
your earned income. Your self-employed earned income is based on
your gross income, minus any deductions you file on your income
Now let's take a closer look at the
employer's responsibilities to employees under a Keogh plan.