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.
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.
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.
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.
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 Both the contributions and earnings grow tax-deferred until being withdrawn.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.
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.
The tax information in this article is not intended to be used, and cannot be used, to avoid possible tax penalties. It was written to promote the products and services the article describes. Neither TIAA-CREF nor its affiliates offer tax advice. Taxpayers should consult an independent tax advisor for advice based on their own particular circumstances.
Keogh annuity contract form series G1350. Not available in all states.
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www.tiaa-cref.org for details.
Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity and may lose value.
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