• Keogh plans are tax-deferred pension plans - either defined benefit or defined contribution - used for retirement purposes by either self-employed individuals or unincorporated businesses, while independent contractors cannot use the Keogh plan.

  • Profit sharing plans are one of two types of Keogh plans that allow a business to contribute up to 100% compensation or $58,000 as of 2021.
  • Keogh plans have more administrative burden and higher maintenance costs than Simplified Employee Pension (SEP) or 401(k) plans, but contribution limits are higher, making Keogh plans a popular option for many high income business owners.
  • Because current pension tax laws do not distinguish between corporate and self-employed plan sponsors, the term “Keough plan” is rarely used.