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On 25 Jan 99, at 8:06, Jeff Adams wrote:
I am trying to understand Keogh plan tax implications. It seems that for propriators the deductible limit is always less than contribution allowed.

Yes. The "nominal" percentage is the percentage of the profit not including the Keogh or SEP contribution itself. So a 15% contribution and $100 profit allows you to contribute $13.04 because $13.04 is 15% of (100-13.04).

As in the previous example, William mentioned 20% contribution. Does that mean that if you contribute 20% to MPP it is fully deductible, or again you have to use a formula to devise a deductible portion? Also, many people make 15+10 split between profit sharing and money purchase plan.

You need the formula. But I already applied the formula in the example. I have the 15+10 you discuss, for a nomimal 25%. So I can contribute $20 for every $100 because $20 is 25% of (100-20).

Is the nondeductible portion subject to excise tax?
I never made a nondeductible contribution, so I know nothing about it.
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