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From: mcb@styx.UUCP (Michael C. Berch)
Newsgroups: net.taxes
Subject: Re: Keogh plan contribution?
Message-ID: <3918@styx.UUCP>
Date: Fri, 19-Apr-85 18:44:33 EST
Article-I.D.: styx.3918
Posted: Fri Apr 19 18:44:33 1985
Date-Received: Mon, 22-Apr-85 06:42:22 EST
References: <2691@harpo.UUCP>
Organization: Lawrence Livermore Laboratory, Livermore, CA
Lines: 31

> For 1984 how much can a self employeed person contribute to a
> Keogh Plan.  In prior years it was limited to 15%.  However
> I read one book that said it was changed to 20% in 1984.
> Comments?

Correct. There are actually three different formulas you can use
(a fixed percentage of income, a variable "profit-sharing" plan,
or a fixed percentage plus a variable percentage). You must elect
one of these formulae when you start the plan. The advertised
figure for maximum deductable percentage is actually 25%, but for
self-employed people the percentage is calulated as a portion of
the income remaining AFTER THE CONTRIBUTION IS SUBTRACTED,
meaning that in reality it is limited to 20% of self-employment
income.

Remember, you can integrate your IRA contribution to the Keogh
account and deduct an additional $2000. In Keogh lingo, this is
called a "voluntary deductible contribution." Of course, you
don't get the IRA also.

If you are self-employed with no employees, you can pretty much
do what you please as far as the yearly contribution, so long as
it doesn't exceed 20%, but the IRS can technically deny
deductibility if you don't follow the terms of your plan.

Check the details out with the Keogh department of a bank, S&L, or
brokerage house.

Michael C. Berch
mcb@lll-tis.ARPA
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