FEDTAX * IRS
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4
Qualified Plans
Qualified retirement plans set up by self-employed individuals are sometimes called
Keogh or H.R. 10 plans. A sole proprietor or a partnership can set up a qualified plan. A
common-law employee or a partner cannot set up a qualified plan. The plans described here
can also be set up and maintained by employers that are corporations. All the rules
discussed here apply to corporations except where specifically limited to the
self-employed.
The plan must be for the exclusive benefit of employees or their beneficiaries. A
qualified plan can include coverage for a self-employed individual. A
self-employed individual is treated as both an employer and an employee.
As an employer, you can usually deduct, subject to limits, contributions you make to a
qualified plan, including those made for your own retirement. The contributions (and
earnings and gains on them) are generally tax free until distributed by the plan.
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