Keogh Plan
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Who is eligible to participate?
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Sole proprietorships or partnerships.
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Generally not applicable. Plans usually provide immediate eligibility to sole proprietors and partners.
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Who contributes?
How much?
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Employers contributions are discretionary or fixed, depending on whether the plan is established as a profit sharing or money purchase plan. The maximum amount of tax-deductible contributions is 15% of eligible compensation of all participants (25% if the plan is a money purchase plan).
Special contribution limit for sole proprietors and partnerships.
Employee contributions are generally not applicable.
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When are contributions vested?
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Generally, employer contributions are 100% vested at the time of contribution.
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How can funds be accessed?
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The plan may permit employees to take loans and/or withdrawals according to plan provisions. Withdrawals made prior to age 59 ½ may incur automatic tax withholding of 20% plus a 10% early withdrawal penalty, unless a permitted exception applies.*
Tax-free rollovers are permitted to an IRA or qualified retirement plan.
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What special administrative requirements are associated with the plan?
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Simplified nondiscrimination testing and "top-heavy" testing is required, along with Form 5500 and ERISA disclosure.
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When you are ready to establish your plan or if you still have questions, contact our Business Banking Service Center at 1-888-489-2265.
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Checks and Forms
