mls@harpo.UUCP (04/18/85)
For 1984 how much can a self employeed person contribute to a Keogh Plan. In prior years it was limited to 15%. However I read one book that said it was changed to 20% in 1984. Comments?
kedem@csd2.UUCP (Zvi M. Kedem) (04/19/85)
/* csd2:net.taxes / mls@harpo.UUCP / 4:53 pm Apr 18, 1985 */ For 1984 how much can a self employeed person contribute to a Keogh Plan. In prior years it was limited to 15%. However I read one book that said it was changed to 20% in 1984. Comments? /* ---------- */
mcb@styx.UUCP (Michael C. Berch) (04/20/85)
> For 1984 how much can a self employeed person contribute to a > Keogh Plan. In prior years it was limited to 15%. However > I read one book that said it was changed to 20% in 1984. > Comments? Correct. There are actually three different formulas you can use (a fixed percentage of income, a variable "profit-sharing" plan, or a fixed percentage plus a variable percentage). You must elect one of these formulae when you start the plan. The advertised figure for maximum deductable percentage is actually 25%, but for self-employed people the percentage is calulated as a portion of the income remaining AFTER THE CONTRIBUTION IS SUBTRACTED, meaning that in reality it is limited to 20% of self-employment income. Remember, you can integrate your IRA contribution to the Keogh account and deduct an additional $2000. In Keogh lingo, this is called a "voluntary deductible contribution." Of course, you don't get the IRA also. If you are self-employed with no employees, you can pretty much do what you please as far as the yearly contribution, so long as it doesn't exceed 20%, but the IRS can technically deny deductibility if you don't follow the terms of your plan. Check the details out with the Keogh department of a bank, S&L, or brokerage house. Michael C. Berch mcb@lll-tis.ARPA {akgua,allegra,cbosgd,decwrl,dual,ihnp4,sun}!idi!styx!mcb