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deertick Date: 4/20/99 10:36 AM Number: 10045
But I also do some consulting work to the tune of about $20,000.

Because this is consulting work, would a Keogh plan be right for me? As I understand it, I could at least put 20%=$5000 toward a Keough Retirement account, and thus only tax the remaining $15000.

You can put at most 20% of your Schedule C profit into a Keogh. 20%=$4,000, and thus tax on the remaining $16,000.

I use a Profit Share Keogh Plan for 15% (the maximum) and a Money Purchase Keogh Plan for 10% (for the maximum total of 25%). You can go with a straight 25% Money Purchase, but the MP contributions are mandatory while the PS are optional, so my combination gives me maximum flexiblilty. The 25% is "nominal," and results in a real contribution of 20% because it is "25% AFTER the contribution." 25% of (100-20) is 20, so 20% is the real number.

Many of the Discount Brokers and all Banks have forms. It's only modestly more complex than opening an IRA.

Tax Strategies Board FAQ has more information, I think.
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