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I am self-employed, and several years ago opened a Keogh acct. through a financial planner. It is in The American Funds Group , through the Investment Co. of America. It's a profit sharing plan, which reinvests dividends and capital gains. It has had a 26.77% annual return rate.

That all sounded intelligent. My questions are very basic, since I opened this on fin. planner's advice and really understood little at that time.

1) What is a Keogh, exactly? (I told you, very basic questions...!)

2) Why have a Keogh and IRA...to be able to put more away for retirement every year?

3) 26.77% sounds good to me.
Am I missing something faulty here?

4) When is this taxed? Are the capital gains taxed every year? What happens when I reach retirement age?

5) Any other insights about this?

I called the trust company this is handled with, and they said they couldn't tell me any answers to these questions, that they only answer specific acct. info questions...that I need a financial advisor. I said I am trying to learn to be my own and don't want to work with same fin. planner anymore. That person still gets 'trailer fees' from Investment Co. of America even though that money doesn't come from my money. I can switch to new broker for free, though. Thanks in advance. meowiz
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After reading all past msgs from this site on Keogh's, I have another question.....if I understood the comments correctly....if one earns more than 40K/year, and has a Keogh, their IRA is not tax deductible.

If we file taxes as married-joint filers, does this mean including my husband's salary, or just my own as far as deducting the IRA 2K if I also have a Keogh? thanks, meowiz
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1) What is a Keogh

Employer sponsored retirement plan. Company deposits pre-tax funds into an account on your behalf.

2) Why have a Keogh and IRA...to be able to put more away for retirement every year?
Yes, company will make deposits into a Profit sharing Keough only if there are profits. Subject to a maximum based on your income, you can also have an IRA.

3) 26.77% sounds good to me.
Am I missing something faulty here?

I am impressed, I've had my Keough in various Fidelity Mutual Funds, and only one had had similar results.

4) When is this taxed?
When you withdraw.

>Are the capital gains taxed every year?

Nope.

What happens when I reach retirement age?

You will be forced, by law, to withdraw a minimum amount each year.amount
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<1) What is a Keogh>

""Employer sponsored retirement plan. Company deposits pre-tax funds into an account on your behalf.""

<<2) Why have a Keogh and IRA...to be able to put more away for retirement every year?>>

""Yes, company will make deposits into a Profit sharing Keough only if there are profits. Subject to a maximum based on your income, you can also have an IRA.""

JWR4...thank you for answering my questions. Since I am self-employed, and I arranged for the Keogh myself, do you mean I am the employer? (this reminds me of one of the old board msgs I read) By 'company', do you mean ME, or the American Funds investment company? thanks alot! meowiz
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This is not intended to be a wise type answer, but this is a changing area of the tax laws and the limits are changing. I recommend that you find a good CPA and invest in 1 hour of his or her time. That should give you a very good basic understanding of this type of plan and the advantages and limits.

I am not saying financial planner but CPA that charges an hourly fee, and will not try to get you to invest the way they want. You sound like you could use the time to get some give and take on the issues, but this type plan is not for everyone, but there are others like simples and seps that could be utilized.

LOL

TiggerToo
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<< I recommend that you find a good CPA and invest in 1 hour of his or her time. That should give you a very good basic understanding of this type of plan and the advantages and limits.>>(tiggertoo)


Tiggertoo,

thanks for your advice. I think this process of educating ourselves will be a slow one incorporating self-learning, TMF and professional advice. We liked the CPA we went to for our taxes this year, but were shocked when he gave us his bill. When we met with him he was unable to give us an estimate, which we should have realized was a bad sign. He was recommended to us by the financial planner we used to go to. It takes time to find people to trust.
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Greetings, Meowiz, and welcome.

<<1) What is a Keogh, exactly? (I told you, very basic questions...!)

2) Why have a Keogh and IRA...to be able to put more away for retirement every year?

3) 26.77% sounds good to me.
Am I missing something faulty here?

4) When is this taxed? Are the capital gains taxed every year? What happens when I reach retirement age?

5) Any other insights about this?>>

Others have answered most of your questions. For info on Keoghs, SEPs, and SIMPLEs refer to our Foolish Retirement Plan Primer at this link: http://www.fool.com/retirement You should also get and read IRS Publication 560, Retirement Plans for Small Business (SEP, Keogh and SIMPLE Plans) available at: http://www.irs.ustreas.gov/prod/forms_pubs/index.html

Both will help you clarify your understanding of what's available and what you've got.


<<After reading all past msgs from this site on Keogh's, I have another question.....if I understood the comments correctly....if one earns more than 40K/year, and has a Keogh, their IRA is not tax deductible.

If we file taxes as married-joint filers, does this mean including my husband's salary, or just my own as far as deducting the IRA 2K if I also have a Keogh? >>

If your joint AGI is over $50K, then your IRA contribution is not deductible. Part is deductible if your AGI is between $40K and $50K. Also, if your spouse is not covered by the Keogh or by any employer's plan, then his IRA contribution is deductible in full until your joint AGI reaches $150K.


<< Since I am self-employed, and I arranged for the Keogh myself, do you mean I am the employer? (this reminds me of one of the old board msgs I read) By 'company', do you mean ME, or the American Funds investment company?>>

As a self-employed person, you are the employer and the plan sponsor even if you are the only participant.

Regards…..Pixy

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