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IRA 
IRAs & Keoughs
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Keough Plans — two types |
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IRAs — available to all | |||||||||||||||||||||
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Tax-deductible; tax-deferred | |||||||||||||||||||||
1. |
Retirement plans for self-employed individuals (sole proprietorships and partnerships) and their employees come in two variations. A "money-purchase plan" allows for contributions of as much as 25% up to $30,000, but is obligatory (the same amount must be set aside each year). A "profit-sharing plan" permits you to set aside as much as 15% of your wages up to $24,000 and is elective (you can change the contribution from year to year). A SEP ("simplified employee plan") is the least complicated of profit-sharing plans. |
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2. |
The most common form of IRA allows you to contribute up to $2,000 per year. You are allowed to make your election as late as April 15 of the following year (unlike Keough and 401k plans, to which contributions for a particular year must be made during that year). |
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The money set aside for a Keough or a regular IRA is deducted from your taxable income. Another benefit is that the your money grows tax-deferred (not taxed until you withdraw these profits during your retirement). There is also the Roth IRA, which does not allow you a tax deduction on your contributions; on the positive side, however, you aren't required to pay taxes on the your Roth IRA contributions when you withdraw the money. |
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 Return to Taxes |
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