What is a key feature of a Keogh plan?

A key feature of a Keogh plan is that it allows self-employed individuals, including sole proprietors and business owners, to save for retirement with significant tax advantages. This type of retirement plan provides similar benefits to those found in traditional pension plans, enabling self-employed persons to contribute a larger percentage of their income compared to other retirement accounts, such as IRAs. Contributions made to a Keogh plan can often be deducted from taxable income, lowering the overall tax burden for these individuals.

While some other retirement plans may have specific restrictions, such as being limited to corporate employees or imposing mandatory contribution levels, the flexibility of a Keogh plan in terms of contribution limits and tax benefits makes it particularly valuable for self-employed individuals looking to build their retirement savings effectively.