Keogh Plan

Are you wondering how to maximize your Keogh Plan?

Would you like to know if it is possible to add physical gold bullion or precious metals to your existing Keogh Plan? We have some answers for you:

About the Keogh Plan

This plan was introduced in 1962. Eugene Keogh was the founder of this pension plan designed for unincorporated business entities and self-employed workers.

The plan is not open to all self-employed people. For instance, independent contractors are not permitted to open a Keogh Plan. In essence, this type of plan is available to self-employed people who run an unincorporated business.

There are two kinds of Keogh Plan. The Defined Benefit Plan and the Defined Contribution Plan. The Defined Benefit Plan works like the traditional pension plan, the only difference being, it is self-funded. The Defined Contribution Plan is a money-purchase or a profit-sharing plan.

The paperwork for Keogh Plans is complex, but the plan is ideal for self-employed high-earners. Set up one of these plans and you are still entitled to contribute to an IRA.

Rollover Rules and Regulations for Keogh Plans

Self-employed people with a Keogh are viewed as employed for rollover purposes. You can rollover all or a proportion of all eligible rollover distributions to a self-directed independent retirement account. This is classed as a tax-free rollover between accounts.

So, any part of a Keogh Plan that is eventually rolled-over to a self-directed IRA will not be counted as income.

A typical withholding limit of twenty percent will apply if the rollover distribution is paid directly to an IRA holder. This can be avoided by conducting a direct rollover.

The benefits of including gold in your retirement fund

Types of Gold Accepted in the Keogh Plan

Keogh Plans work much like the standard IRA (Roth and traditional) and the 401K. The plan can incorporate:

  • Individual bonds – government and corporate
  • Individual stocks
  • Mutual funds
  • Certificates of deposit (CDs)
  • Exchange-traded funds (ETFs)

Those who have a Keogh Plan cannot invest in bullion or physical gold.

The easiest way to invest in gold through a Keogh is to buy a mutual fund that includes mining company stocks or to purchase gold mining stocks. This is known as buying ‘paper gold’ which means you are investing in gold indirectly.

Purchasing mining ETFs or gold ETFs are also indirect ways to invest in gold.

Invest in ‘Paper Gold’ or Physical Gold?

‘Paper gold’ stocks are the name given to shares in companies that explore, mine or produce gold. Many large companies of this type are included in the Gold Miners Index (GDX) and the Bugs Index (HUI).

Some investors feel the risk is higher if you invest in gold stocks and prefer to instead  invest in physical gold. Possible gold stocks risks include:

  • Management Risk
  • Regulatory Risk
  • Flat Currency Risk
  • Cost of Production Risk

These risks explained

The Advantages of Rolling-Over a Keogh Plan to a Precious Metals IRA

Rollover assets from Keogh Plans into a self-directed IRA and you are in total control of your retirement funds. Do this and you have the opportunity to invest in alternative assets, such as precious metals.

Employer-funded retirement plans like Keogh Plans have their limitations. Precious metals IRAs offer flexibility.

Those who have a Keogh Plan must establish a vesting schedule, this means they can only draw funds after a certain length of time. So it’s easy to see why the IRA is such a popular way to invest for your retirement.

In addition to this, Keogh Plans carry higher fees. Keoghs are more difficult to maintain than the traditional IRA rollover.

The Advantages of Changing a Percentage of your Retirement Plan to Precious Metals

Why Invest In Gold?

Investing in gold is an easy and safe way to diversify a retirement portfolio.  Gold and silver, platinum and palladium will protect your assets from inflation and a volatile stock market. Gold prices continue to rise and, based on historical performance, analysts predict further rises over time.

Gold should be seen as a long term investment, which is why it is an ideal fit for retirement planning. It is wise to diversify your retirement portfolio as you receive tax-benefits on precious metal investments.

Nevertheless investors should consider their date of retirement and tolerance to risk before adding precious metals to their retirement plan.

Choose the Right Gold IRA Company for Your Keogh Plan Rollover

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Author: Doug Young