What Is a Keogh Plan?

Your Income Is the Limit, Not a Cap.

A Keogh Plan (also called an HR-10 plan) is a tax-deferred qualified retirement plan for unincorporated self-employed individuals — sole proprietors, partners in a partnership, and members of LLCs taxed as partnerships. It offers the same retirement plan types available to corporations — including Defined Benefit plans with actuarially determined contributions that can far exceed every other self-employed plan — without the cost or complexity of incorporation.

The Keogh designation applies to both Defined Contribution plans (profit-sharing, money purchase) and Defined Benefit plans. The DB Keogh is the structure of choice for high-income professionals over 50 who want to maximize retirement savings rapidly — because contributions are calculated actuarially based on the target benefit and the number of years to fund it, not a flat dollar cap that ignores both age and income level.

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01

The DB Keogh: Why Age Amplifies Your Contribution

A Defined Benefit Keogh breaks DC plans' age-blind contribution model. Since an enrolled actuary calculates contributions needed to fund a fixed retirement benefit, less time to retirement means dramatically higher allowable contributions. The IRS permits this as actuarial necessity, not choice — making DB Keoghs uniquely powerful for late-saving or late-peaking-income professionals.

02

DC Keogh vs SEP-IRA: The Difference That Matters at High Income

DC Keoghs and SEP-IRAs share identical caps — 25% of net SE income or $69,000 — and similar contribution flexibility. The real distinction is structural: a DC Keogh can pair with a DB Keogh on one return, enabling dual-contribution strategies. SEP-IRAs lack this combinability, making Keoghs the better fit for layered retirement planning.

03

Combining the DB Keogh With a 401(k): The Maximum Stack

A self-employed professional can run a DB Keogh alongside a Solo 401(k), stacking contributions independently. The DB Keogh funds an actuarially required amount, often $100,000–$300,000+ for older professionals, while the 401(k) adds employee deferrals on top. Combined deductions can exceed $200,000, yielding six-figure tax savings at the 37% bracket.

I

Actuarially Determined — Not Arbitrarily Capped

Every other self-employed retirement plan caps contributions at a flat dollar amount that ignores both age and the proximity of retirement. The DB Keogh's contribution is actuarially derived from the benefit you want to fund, the number of years you have to fund it, and assumed investment returns. The shorter the window, the larger the required contribution — and the larger the annual deduction.

  • Enrolled actuary certifies the contribution — IRS requires this for all DB plans
  • Contribution scales dramatically with age — a 57-year-old contributes far more than a 37-year-old
  • Target benefit up to $275,000/year in retirement income (2024 IRS limit)
  • Annual valuation confirms the plan is on track and adjusts contributions accordingly
  • No flat cap — contribution can legally exceed $100,000, $200,000, or more for the right candidate
II

The Largest Deductible Retirement Contribution Available

For a self-employed professional in the 37% bracket, a DB Keogh contribution of $200,000 generates $74,000 in immediate federal tax savings — in addition to reducing the self-employment tax base. The net cost of the contribution, after accounting for the deduction, is $126,000 to fund $200,000+ per year in guaranteed retirement income. No investment vehicle produces an immediate return comparable to a large DB Keogh deduction in a peak-income year.

  • 100% deductible as a business expense on Schedule C or partnership return
  • Reduces both federal income tax and the self-employment tax calculation base
  • Deduction taken in the contribution year — before funds are invested
  • Stacks with Solo 401(k) employee deferral for a combined dual-plan deduction
  • For high-income professionals near retirement: the largest single-year tax reduction available
III

ERISA Protection and Governance

Keogh Plans are ERISA-qualified plans — they carry the federal legal protections and compliance requirements of corporate pension plans. This includes the strongest creditor protection available to self-employed professionals: Keogh plan assets are generally protected from personal creditors under federal ERISA law. The tradeoff is annual compliance — Form 5500, enrolled actuary certification, and contribution discipline — all managed by PWR.

  • ERISA-qualified: federal creditor protection stronger than IRA or non-ERISA plans
  • Form 5500 or 5500-SF annual filing with the Department of Labor
  • Enrolled actuary certifies funding adequacy annually
  • Assets held in a trust — separate from personal assets
  • At termination: assets rolled to IRA for continued tax-deferred growth
Plan Structures

Six Keogh Structures
One Optimal for Your Income.

Defined Benefit Keogh Plan

The most powerful contribution structure available to a self-employed professional — a DB Keogh promises a specific annual retirement income and calculates the required annual contribution to fund it, based on the professional's age, income, and years to retirement. For professionals over 50 with high income, the actuarially required contribution can dramatically exceed any defined contribution plan limit.

  • Target benefit up to $275,000/year in retirement income (2024)
  • Annual contribution actuarially calculated — scales with age and funding horizon
  • Contributions 100% deductible — often $100,000–$300,000+ for older high earners
  • Must be established by December 31 of the tax year
  • Annual Form 5500 filing and enrolled actuary certification required
  • At retirement: lump sum rollover to IRA or lifetime annuity distribution
Run The Maximizer

At a glance

$275K

Max annual retirement benefit

Actuary

Required annual calculation

100%

Fully deductible each year

Dec 31

Hard establishment deadline

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Defined Contribution Keogh Plan

A DC Keogh provides the same 25%-of-compensation contribution as a SEP-IRA, but with the flexibility of a profit-sharing structure — discretionary contributions from 0% to 25% of net SE income, maximum $69,000. Its primary advantage over the SEP-IRA is the ability to run alongside a DB Keogh on the same return, or to provide a money purchase component with mandatory fixed contributions.

  • Profit-sharing: contribute 0%–25% of net SE income each year at your discretion
  • Money purchase: fixed mandatory percentage each year (less common today)
  • Maximum contribution: $69,000 (2024) — same as SEP-IRA ceiling
  • Can be combined with a DB Keogh for a dual-plan contribution structure
  • Form 5500 required annually for most DC Keoghs
  • Generally no enrolled actuary required — simpler than DB Keogh
Run The Maximizer

At a glance

$69K

Maximum annual contribution

Flexible

0%–25% discretionary range

Combine

With DB Keogh on same return

Simple

No actuary required

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DB Keogh + DC Keogh Combination

A self-employed professional can maintain both a DB Keogh and a DC Keogh simultaneously — the contributions from each plan stack independently. The DB provides the actuarially required amount for the target retirement benefit; the DC adds a discretionary profit-sharing layer on top. Combined with the Solo 401(k) employee deferral, this structure is the most powerful retirement contribution stack available to any unincorporated professional.

  • DB Keogh: actuarially required contribution — the large, primary layer
  • DC Keogh profit-sharing: additional 0%–25% discretionary layer
  • Solo 401(k) employee deferral: additional $23,000 ($30,500 at 50+) on top
  • Combined contributions can legally exceed $200,000+ per year
  • All three contributions are 100% deductible in the same tax year
  • PWR models all three simultaneously for maximum coordinated deduction
Run the Maximizer

At a glance

$200K+

Combined potential annual deduction

3 Plans

DB Keogh + DC Keogh + 401(k)

Stack

All contributions in one tax year

Max Tax

Reduction at peak income years

Model My Maximum Contribution Stack

Three deductible layers running simultaneously — the most powerful self-employed retirement structure.

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Keogh Plan vs Solo 401(k)

The Solo 401(k) offers an employee deferral component that the SEP-IRA and DC Keogh lack — making it the preferred defined contribution plan for self-employed professionals at most income levels. The Keogh's advantage appears specifically in the DB structure, where the actuarially determined contribution can dramatically exceed the Solo 401(k) limit for older, higher-income professionals. PWR models both before recommending.

  • Solo 401(k): employee deferral $23,000 + employer profit-sharing up to $46,000
  • DC Keogh: no employee deferral component — employer contribution only
  • DB Keogh: no contribution cap — actuarially determined, can exceed $200,000
  • Solo 401(k) is typically preferred for professionals under 52 at most income levels
  • DB Keogh is superior for professionals over 54 with high income and short funding window
  • Both plans can be combined for a maximum dual-contribution structure
Run the Maximizer

At a glance

Under 52

Solo 401(k) typically wins on flexibility

Over 54

DB Keogh dramatically outperforms

Combine

Both for maximum annual deduction

Model

Both before choosing structure

Compare Keogh vs Solo 401(k) for My Income

Side-by-side contribution model at your age, income, and bracket — before making any commitment.

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Pre-Sale Keogh Strategy

A self-employed professional selling their practice or winding down their business in 3–7 years can implement a DB Keogh specifically to reduce taxable income in those high-income pre-sale years. The plan is established while income is still active; large deductible contributions are made for 3–7 years; and at plan termination, assets are rolled to an IRA for Roth conversion strategy and post-sale distribution planning.

  • Established in final years of business to reduce taxable income before sale
  • Pre-sale DB Keogh contributions can exceed $150,000–$300,000/year for the right profile
  • At plan termination: assets rolled to IRA for Roth conversion strategy
  • Rollover preserves full balance tax-deferred for post-sale income management
  • Coordinate plan termination timing with business sale closing date
  • Combined with DB Keogh deduction: dramatically reduces the effective tax rate on sale proceeds
Run the Maximizer

At a glance

Pre-Sale

Tax reduction in final income years

Roll

To IRA at plan termination

Roth

Conversion strategy post-sale

3–7 Yrs

Optimal pre-sale Keogh window

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Use the years before your business sale to maximize deductions while building a retirement income foundation.

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Keogh Plan Termination

Terminating a DB Keogh requires actuarial certification that the plan is 100% funded, PBGC notification where applicable, participant benefit elections, and a formal plan termination filing. The most common and most financially advantageous termination option is a direct rollover of the full plan balance to a Traditional IRA — preserving the full amount tax-deferred and opening the Roth conversion window for post-retirement tax management.

  • Plan must be 100% funded at termination — final actuarial certification required
  • PBGC notification where applicable — enrolled actuary coordinates the process
  • Lump sum distribution: immediately taxable — rollover strongly recommended for large balances
  • Direct rollover to Traditional IRA: full balance preserved tax-deferred
  • Post-rollover: Roth conversion calendar activated for retirement distribution strategy
  • PWR coordinates enrolled actuary, ERISA counsel, and IRA custodian at termination
Run the Maximizer

At a glance

100%

Funded required at termination

Rollover

To IRA — most common exit

Actuary

Final valuation required

Roth

Conversion strategy post-rollover

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Terminate correctly — fully funded, properly filed, assets rolled to the optimal post-plan structure.

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Plan Lifecycle

From October Design to IRA Rollover

The Decision
DB, DC, or Combination?
  • Solo professional: DB Keogh is typically optimal at age 50+ with high income
  • Employees present: model employee contribution cost before recommending DB structure
  • DC Keogh alone: appropriate when income is variable or employee coverage is needed
  • Combination: DB + DC Keogh provides the largest possible deduction stack for unincorporated professionals
  • PWR models all three scenarios before recommending any structure
Key Advisors
CPA + Enrolled Actuary Required
  • Enrolled actuary: calculates annual contribution, certifies Form 5500 Schedule SB
  • CPA: coordinates deduction on Schedule C or partnership return, confirms SE tax savings
  • ERISA counsel: advises on employee eligibility, vesting, and plan document compliance
  • PWR: coordinates all three advisors and manages the client engagement end-to-end
PWR Strategy
Model First — Establish Before December 31
  • PWR models DB vs DC vs combo at the client's income, age, and bracket before any plan is recommended
  • Enrollment in October — December 31 deadline is non-negotiable and not recoverable
  • No plan document is adopted until the contribution model is approved by the CPA
  • Formal actuarial illustration provided to CPA for tax return preparation
The Deadline
December 31 Is Firm — No Extensions
  • Keogh Plan must be established by December 31 of the tax year for the first deduction
  • Unlike SEP-IRA: no filing extension available — December 31 is the hard cutoff
  • Plan document executed by employer — IRS prototype or custom document
  • EIN required — even for sole proprietors without employees
  • PWR target: plan documents signed and acknowledged by November 30
Documentation
Plan Document + Trust Agreement
  • Adoption agreement specifies plan type (DB or DC), benefit formula, and eligibility
  • Trust agreement establishes the plan trust — assets held separately from personal accounts
  • Actuarial assumptions documented at inception: interest rate, retirement age, mortality table
  • Plan EIN established — separate from the individual's SSN or business EIN
PWR Strategy
October Is the Last Safe Establishment Month
  • PWR initiates Keogh engagement in Q3 for all new clients intending to contribute for the current year
  • October deadline gives time for plan document review, actuary engagement, and CPA approval before December 31
  • Any delays in plan establishment = zero deduction for that year — a permanent loss
  • PWR tracks establishment status weekly in Q4 for every active Keogh engagement
The Timeline
Contribution Due Dates by Plan Type
  • DB Keogh: contributions due by tax filing deadline including extensions (October 15)
  • DC Keogh: same deadline as DB — October 15 with extension
  • Minimum funding: if plan is underfunded, a contribution may be legally required
  • Maximum: contributions above the actuarially required amount trigger excise tax — never overfund without actuary guidance
Annual Process
Actuary → CPA → PWR → Contribution
  • Enrolled actuary recalculates required contribution based on prior year-end balance and investment performance
  • CPA confirms deduction amount and schedules estimated tax payment for the contribution year
  • PWR confirms contribution is funded in the plan trust account before the filing deadline
  • Actuarial valuation provided to CPA — enables accurate Schedule C deduction reporting
PWR Strategy
Every Year of Maximum Contribution Counts
  • Each year without a maximum DB Keogh contribution is a permanently lost deduction opportunity
  • The actuarial advantage decreases as the participant approaches retirement age — start early and contribute every year
  • PWR provides the CPA with the required contribution amount in Q3 — enabling estimated tax payment planning
  • If income decreases in a given year, PWR models whether a reduced minimum contribution is acceptable
What's Required
Form 5500 — Annual Plan Report
  • All DB Keoghs and most DC Keoghs file Form 5500 or Form 5500-SF with DOL annually
  • Due July 31 for calendar-year plans — extension to October 15 available
  • Enrolled actuary certifies actuarial information on Schedule SB for DB plans
  • PBGC coverage may apply for plans with employees above the vesting threshold
What's Reported
Funding Level and Plan Status
  • Total plan assets at December 31 of the prior plan year
  • Actuarial value of accrued benefits — determines the plan's funding ratio
  • Number of eligible participants and their vesting status
  • Any minimum required contribution — confirms the plan is on track
PWR Strategy
Form 5500 Penalty = $250/Day — Never Miss
  • PWR tracks Form 5500 deadlines for every Keogh client — no filing is ever missed
  • Enrolled actuary provides Schedule SB data by June — well ahead of the July 31 deadline
  • Extension filed by July 31 when needed — deadline never at risk
  • PBGC premium payment coordinated with annual filing where applicable
PWR Strategy
Termination Strategy Built at Plan Design
  • PWR builds a termination scenario into every Keogh engagement from inception
  • At retirement: IRA rollover processed, Roth conversion calendar activated
  • At business sale: Keogh termination coordinated with sale timeline
  • PWR coordinates enrolled actuary, CPA, ERISA counsel, and IRA custodian at termination — single point of coordination
Keogh Contribution Maximizer

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Business continuation planning helps a company prepare for unexpected events that could interrupt daily operations, revenue, leadership, or client service. It focuses on keeping the business active when challenges appear. A strong plan may include emergency procedures, leadership backup, succession direction, key-person protection, financial safeguards, and recovery steps. The goal is to reduce confusion, protect business value, and help owners continue serving clients even during difficult situations.

Business continuity is important as all organizations are vulnerable to unexpected disruptions. A sudden illness, partner conflict, employee loss, cyber issue, natural event, or financial problem can quickly affect operations. With proper Business continuity Management, owners can create a clear response plan before problems happen. This gives employees, partners, and stakeholders better direction during uncertain times. It also helps protect revenue, reputation, customer trust, and long-term business stability.

Business continuation planning protects a company by identifying risks and creating practical steps to manage them. It helps owners decide who will lead, how operations will continue, and how important responsibilities will be handled. Without a plan, business decisions may become rushed or emotional during a crisis. A continuation strategy creates order, reduces downtime, and helps the company stay focused. It can also support ownership transitions, funding needs, and key-person risk management.

Business continuation planning in Puerto Rico can benefit business owners, family companies, partnerships, professional firms, and growing organizations that depend on key people or steady operations. Puerto Rico businesses may face unique local challenges, including weather-related interruptions, ownership transitions, compliance concerns, and market changes. A well-built continuity plan helps owners prepare for these realities while protecting employees, clients, and business value. It is especially useful for companies that want long-term security and smoother succession planning.

A business continuity plan should include leadership roles, emergency contacts, recovery procedures, financial protection, key-person planning, communication steps, and ownership transition guidance. It should also explain how important operations will continue. The plan should be practical, not overly complicated. Business owners need clear steps that can be followed during real pressure. A useful plan connects people, processes, and financial decisions so the company can respond quickly, protect clients, and continue moving forward.

Insurance may provide financial support after a covered event, but business continuity focuses on how the company will keep operating during and after disruption. Both can work together, but they are not the same. A strong continuity strategy looks at leadership, operations, communication, decision-making, succession, and recovery. Insurance may help cover certain losses, while planning helps reduce confusion and protect business direction. Together, they can create stronger protection for owners and stakeholders.

Yes. Business continuity planning can support succession by preparing the company for leadership changes, ownership transfers, or the loss of a key decision-maker. It gives the business a clearer path forward. This is especially important for family-owned businesses, partnerships, and companies where one person holds most of the knowledge or authority. An effective plan clarifies roles, minimizes conflicts, and safeguards the company's future. It allows the transition to feel more organized and less reactive.

A company should review its continuity plan whenever there are major changes in ownership, leadership, revenue, employees, locations, or business goals. Even without major changes, regular reviews are important. A plan that worked years ago may no longer fit the company today. Updating the plan helps ensure responsibilities, financial strategies, emergency procedures, and succession details remain accurate. This keeps the business better prepared and gives owners more confidence when unexpected situations arise.