What Is a Keogh Retirement Plan? Guide to Contributions, Eligibility

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If you’re self-employed or run a small, unincorporated business, you’ve likely wondered what is a Keogh retirement plan and whether it can help you save more — faster. Short answer: a Keogh (also called an HR-10 or qualified plan) is a tax-deferred retirement plan built for high earners who want bigger, deductible contributions and, in some cases, a pension-style benefit in retirement. It’s more paperwork than a SEP IRA or Solo 401(k), but the savings potential can be worth it.

Below, you’ll find plain-English rules, 2025 contribution limits, pros and cons, real-life examples and a head-to-head comparison with SEP IRAs and Solo 401(k)s so you can choose confidently.

Quick Facts: Keogh Retirement Plans

• Who it’s for: Self-employed individuals and unincorporated small businesses.
• Types: Defined-contribution (profit-sharing, money-purchase) or defined-benefit (pension-style).
• 2025 limits: Up to $70,000 for DC plans; fund toward $280,000 annual benefit for DB plans.
• Why choose it: Deductible contributions, tax-deferred growth and higher savings caps than SEP IRAs.
• Trade-offs: More paperwork, filings and costs compared to SEP or Solo 401(k).

What Is a Keogh Plan?

A Keogh plan — named after Congressman Eugene Keogh — was the original retirement plan for self-employed professionals and unincorporated businesses. Today, the IRS classifies these as qualified plans (you’ll also hear HR-10). The nickname “Keogh” stuck, so advisors still use it.

Background & Terminology

• “Keogh” is the legacy name; “qualified (HR-10) plan” is the current IRS term.
• Qualifies for tax-deductible contributions and tax-deferred growth under ERISA and the Internal Revenue Code.

Eligibility Requirements

You can sponsor a Keogh if you’re:

• A sole proprietor, partnership or LLC with self-employment income.
• An incorporated business can use other qualified plans, but the classic “Keogh” label is most common for unincorporated businesses.
• W-2 employees can’t set one up themselves, though they may participate if their employer sponsors one.

Good to know (and why this matters): The self-employed segment is large and growing — roughly 16.5 million Americans work primarily for themselves — so plans designed for solo professionals remain a big deal for retirement readiness.

Types of Keogh Plans & 2025 Contribution Limits

Keoghs come in two flavors: defined-contribution and defined-benefit. Pick the structure that best matches your income pattern and retirement goal.

Defined-contribution Keogh

• Profit-sharing: You choose how much to contribute each year (often tied to profits).
• Money-purchase: You commit to a fixed percentage of income every year (stricter, but predictable).
• 2025 limit: Contribute up to $70,000 or 100% of compensation, whichever is less.
• Compensation cap: Contributions are calculated only on pay up to $350,000 in 2025.

Defined-benefit Keogh (Pension-style)

• Promises a set annual benefit at retirement (e.g., “pay me $X per year”).
• Requires an actuary to compute your annual required contribution.
• 2025 limit: Can fund for a maximum annual benefit up to $280,000 (or 100% of compensation).
• More admin, but potentially much higher annual, tax-deductible contributions than DC plans.

IRS Reporting & Compliance

• Keoghs are governed by ERISA; you’ll likely need Form 5500 filings.
• Plans must pass nondiscrimination testing if you have eligible employees — no favoring owners.

Compliance snapshot: If plan assets exceed $250,000, qualified plans (including Solo 401(k)s) generally must file Form 5500-EZ annually.

Keogh vs. SEP IRA vs. Solo 401(k)

If you’re choosing a self-employed plan today, you’re likely comparing these three. Use the table, then read the quick guidance below.

Rule of Thumb:

• Choose a Keogh if you’re a high-earning professional who can afford admin costs and wants the highest deductible contributions (especially with a defined-benefit design).
• Choose a SEP IRA if you want simplicity and your income fluctuates (employer-only contributions).
• Choose a Solo 401(k) if you want Roth, catch-ups and possibly loans — with lower admin than a Keogh.

For 2025, the defined-contribution annual additions limit is $70,000, while the IRA limit is just $7,000 ($8,000 if 50+) — a massive gap in favor of business-owner plans.

Pros & Cons of a Keogh Plan

Like with any retirement plan, there are some specific pros and cons to keep in mind with a Keogh Plan.

Pros

• Very high contribution potential: DC funding up to $70,000; DB can target a $280,000 annual benefit — powerful for tax deductions.
• Tax deferral: Contributions are deductible now, growth is tax-deferred until retirement.
• Customization: Profit-sharing or money-purchase for DC; pension-style DB for guaranteed income goals.

Cons

• Paperwork & cost: Plan documents, Form 5500 filings and actuarial services for DB plans.
• Less flexible than SEP/Solo 401(k): Especially in DB designs with required funding.
• Employee coverage rules: If you have eligible employees, you must include them and meet nondiscrimination tests.

Who Should Consider a Keogh?

• A solo doctor, dentist or attorney earning well into six figures who wants to maximize deductions and lock in a pension-style benefit.
• A small law or medical practice with partners ready to fund aggressively and handle complex admin.

Retirement timing note: Required Minimum Distributions (RMDs) now start at age 73 for most retirees under SECURE 2.0 — another reason to plan your funding and exit strategy thoughtfully.

How to Set Up & Manage a Keogh Plan

Here’s a step-by-step guide to getting your own Keogh Plan up and running ASAP:

1. Choose Plan Type: DC or DB

• Defined-contribution (profit-sharing or money-purchase): More familiar, simpler than DB, but capped at $70,000 annual additions.
• Defined-benefit: Highest potential deductions, but requires an actuary and steady cash flow.

2. Draft the Plan & Adopt Documents

Work with a third-party administrator (TPA) or benefits attorney to create compliant plan documents and set eligibility, vesting and contribution formulas.

3. ERISA Registration & Notices

Keoghs are ERISA plans. Expect Form 5500 filings and participant disclosures if you have eligible employees.

4. Enroll Any Eligible Employees

You must include eligible staff under nondiscrimination and coverage rules — no favoring owners.

5. Fund By Deadlines

• Employer contributions: Generally due by your tax filing deadline (including extensions).
• Money-purchase plans: Funding is required each year, per the fixed percentage.
• Defined-benefit: Fund per actuarial calculation to stay on track for the promised benefit.

6. Know Your Rollover & Distribution Rules

• Penalty-free withdrawals at 59½; early withdrawals generally face taxes + penalty.
• RMDs start at 73 (or 75 for some younger cohorts under phased SECURE 2.0 rules).
• You can roll a Keogh to an IRA or another qualified plan if you terminate or change plan design –just follow rollover rules to avoid taxes.

Administrative stat: Crossing $250,000 in plan assets typically triggers Form 5500-EZ filing for one-participant plans (and full 5500 for others).

Keogh vs. SEP IRA vs. Solo 401(k): Quick Decision Guide

• Choose Keogh (DC) if you’re comfortable with admin and want structured, high employer contributions beyond what a SEP might meaningfully add.
• Choose Keogh (DB) if you want a pension-like benefit and very high deductible contributions (often the most deductible dollars of any option).
• Choose SEP IRA if you want fast setup and low maintenance with employer-only contributions.
• Choose Solo 401(k) if you want Roth, catch-ups and loan features with moderate paperwork.

Another useful benchmark: Defined-benefit funding can outstrip DC caps because it’s calculated to meet a promised benefit. That’s why many high-earning solo professionals use DB Keoghs in their late 50s and early 60s to front-load deductions before retirement.

Final Take to GO: Is a Keogh Right for You?

You now know about the Keogh retirement plan: a powerful, tax-deferred option for self-employed high earners who want either maximum deductible contributions (DC) or a pension-like benefit (DB). It’s more work than a SEP IRA or Solo 401(k), but the payoff can be substantial if you’re earning well and can fund consistently.

Before you decide, run the numbers on contributions, deductions and cash-flow needs — and weigh the admin burden. Then pick the plan that gets you to your retirement number with the least friction.

Next steps:

• Estimate your retirement target with our retirement calculator.
• Explore where your money will last longer using how long $1 million lasts by state.
• Talk with a retirement plan administrator or CPA if a defined-benefit Keogh is on your radar.

Information is accurate as of Sept. 29, 2025.

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