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If you were to opt for a defined benefit Keogh plan, given your age of 50 you might be able to contribute more than $30K. When we started my husband's plan in the early 1980's the maximum then was $90K or more. But there had to be substantial self-employement income and the earner had to be within a decade or so to retirment. The calculations are based upon a combination of your self-employed income, your age, the investment success of your Keogh portfolio and some voo-doo calculations by an actuary. My husband has this type of plan and it has allowed up to put away money even in years when we did not make much. Our income was very uneven from year to year. In good years, we kept back cash to fund the less lucrative years. This occurs because the actuarial assumptions smooth out the high and low years and using a rate of return acceptable to the IRS caculates what the contribution needs to be in order to reach the determined benefit upon retirement age. The older one is, the larger the contribution will need to be in order to reach the allowed benefit upon retirement. In other words, the contributor is in effect catching up.
The downside to this is that you have to provide the same type of plan to all full-time employees under your control, even those in other companies you might own. That can be very expensive. In our case we had one secretary as an employee at another company and my husband was a contractor / self-employed. Because my husband controlled the company for which the secretary worked, he had to contribute much more than a standard amount to a plan for her. With only one employeee it was bearable, but with more, the financial burden was too much.

However, when we slimmed down, took on fewer projects, and eliminated the clerical position, we were actually money ahead. The key is to opt for the defined benefit keogh. The costs are about $2,500 per year because you are paying for a benefits specialist and an actuary. That is steep as a percentage of your total keogh portfolio in the early years, but if your tax bracket is 39% plus, the tax savings can help pay for it. The positive about the cost of admin is that it remains constant regardless of the size of the portfolio. I do the accounting for the plan and send the results to the benefits specialist. This saves some in expenses.

Not many people opt for the defined benefit plan because in good times and bad you have to fund it. You do therefore have to LBYM during the cash flush times.

Good Luck.

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