Advisors Working with Individuals

Keogh Plans

Keogh plans are tax-deferred retirement plans for self-employed individuals and their employees.

As of the end of 2012, TIAA-CREF no longer issues new Keogh plans but we do continue to service two types of existing Keogh plans: Profit Sharing and Money Purchase.

TIAA-CREF imposes no front load or surrender charges on a Keogh plan.

Investments

The nominal contribution amount is $100 for self-employed individual accounts. A partnership could simply place the $100 contribution in the account of one partner.

Contribution limits

Keogh only: If your client is self-employed and the Keogh is his or her only retirement plan, the contribution limit is $51,000 or 100% of eligible compensation, whichever is less for the tax year 2013. The maximum deductible contribution is 25% of eligible compensation. A tax advisor can assist in calculating your client’s maximum deduction.

Keogh and 403(b) plans: If your client participates in both a 403(b) and a Keogh plan, the contribution made to both plans cannot exceed $51,000 in 2013, or 100% of eligible compensation.

Keogh and qualified plans: Contribution limits for the qualified plan and the Keogh are calculated separately. The maximum contribution to each plan can be $51,000 in 2013, or 100% of eligible compensation, whichever is less for the tax year. Since the contribution limits are calculated independently, the potential maximum combined contribution amount can be as high as $101,000 in 2013. A tax advisor can assist in calculating the client’s maximum contribution limits.

Liquidity

Only a profit-sharing Keogh plan permits in-service cash withdrawals. The employer must elect this option in the prototype. In-service cash withdrawals are not available from a money-purchase Keogh plan.

Taxation

Contributions are made before taxes, which reduces the individual’s taxable salary. Both the contributions and earnings grow tax-deferred until being withdrawn. If an individual withdraws money from a Keogh plan before age 59½, it will be subject to regular income tax and a 10% early distribution penalty.

Service a Keogh

To service a Keogh, please call us at 888 842-7782, Monday through Friday, 8:00 a.m. to 8:00 p.m. ET.

Speak to a TIAA-CREF Advisor Services representative regarding an existing Keogh plan today.

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Call us at 888 842-0318

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