Keogh plans (also called qualified retirement plans, H.R. 10 plans, or self-employed retirement plans) are a type of ERISA retirement plan for self-employed individuals and employees of some private businesses. The plans allow tax-deferment for any contributions and benefits, mirroring the other plans created by Congress to encourage savings for retirement. The employee does not pay taxes for contributions under the annual limit until retirement. As with other retirement plans like 401ks, Keogh plans limit employees from making withdrawals until reaching 59 ½ and require employees to begin withdrawing at age 72. An employee can make withdrawals earlier subject to a 10% extra tax.
There are multiple types of Keogh plans with differing structures and contribution limits. One structure is a defined benefit Keogh plan where the employer ensures a fixed payment to the employee after retirement based on multiple factors, and these plans may receive up to $245,000, as of 2022, a year in benefits during retirement. A keogh plan may also be structured as a defined contribution plan where employee and employer contributions to the plan may be $61,000 a year as of 2022 with potentially higher limits for those above 50.
The name Keogh plan comes from Representative Eugene James Keogh who introduced the legislation that created the plans in 1962. The Internal Revenue Service (IRS) and common parlance no longer use the term and instead refer to Keogh plans as qualified retirement plans or H.R. 10 plans.
[Last updated in March of 2022 by the Wex Definitions Team]