Keogh plans were the original tax-advantaged retirement vehicle for the self-employed, named after the 1962 law that created them. The name still shows up on old paperwork and in older savers vocabulary, but the plan itself has been absorbed into the same "qualified plan" rules that cover corporate pensions. If someone mentions a Keogh plan in 2026, they are almost certainly describing a plan structure that a SEP-IRA or solo 401(k) has since made easier to run.
What changed in 2026
- Contribution formulas still follow the annual defined-contribution limit set by the IRS each year — verify the current figure before assuming last years number still applies.
- Fewer providers actively offer new Keogh plans. Most brokerages steer self-employed clients toward a SEP-IRA or solo 401(k), which cover similar ground with less paperwork.
- Existing Keogh plans still need annual compliance work, including a Form 5500 filing once assets cross the reporting threshold, so long-time holders should not assume "set and forget."
Money purchase vs profit-sharing Keogh plans
A Keogh plan is really an umbrella term for two distinct structures:
- Money purchase plan — you commit to a fixed contribution percentage of income every year, written into the plan document. Miss it and you risk a compliance problem, not just a missed opportunity.
- Profit-sharing plan — contributions are discretionary each year, up to the same cap, which suits income that swings year to year.
Many older Keogh plans actually combine both structures to hit the maximum contribution while keeping some flexibility. That combination is exactly what added the administrative weight that pushed newer savers toward simpler alternatives.
Keogh plan vs SEP-IRA vs solo 401(k)
| Feature |
Keogh plan |
SEP-IRA |
Solo 401(k) |
| Plan document required |
Yes, formal |
No |
Yes, but simplified |
| Annual Form 5500 |
Often, once assets grow |
Not required |
Once assets cross the threshold |
| Contribution flexibility |
Fixed or discretionary |
Discretionary |
Discretionary, plus salary deferral |
| Loan option |
Rare |
No |
Often available |
| Setup complexity |
High |
Low |
Moderate |
The solo 401(k) generally wins for a business owner with no employees because it allows both an employee deferral and an employer contribution, which can raise the total amount you can put away in a given year compared with a SEP-IRA alone.
Who still has one, and what to do about it
If you inherited a Keogh plan from a prior accountant or set one up decades ago, you do not need to unwind it in a panic. Confirm the plan document is current, check whether Form 5500 filings are up to date, and compare the ongoing admin cost against rolling the balance into an IRA or a solo 401(k). A rollover is usually possible without triggering tax, but confirm the mechanics with a tax professional before moving money — this is general information, not tax or financial advice.
Pitfalls to watch for
- Assuming the plan self-administers. Older Keogh plans need someone actively tracking contribution formulas and filing deadlines.
- Missing a mandatory money purchase contribution in a lean year, which can create a compliance headache with the IRS.
- Forgetting the plan document needs updates when tax law changes; an outdated document can jeopardize the plans qualified status.
FAQ
Can I open a brand-new Keogh plan in 2026?
Technically the structure still exists in the tax code, but very few providers actively support new Keogh plans. Most self-employed savers use a SEP-IRA or solo 401(k) to reach the same goal with less overhead.
Is a Keogh plan the same as a pension?
It is a type of qualified retirement plan, similar in spirit to a small-business pension, but it is funded and controlled by the self-employed individual rather than a separate employer.
What happens to my Keogh plan if I incorporate my business?
You can generally keep it or roll it into a new employer-sponsored plan, but the rules depend on your entity structure. Check with a plan administrator before making changes.
Do Keogh plan contributions reduce my taxable income?
Yes, contributions to a traditional Keogh plan are generally pre-tax, similar to other qualified retirement plans, which is part of why some savers keep them running. Confirm your own tax treatment with a professional.
Where to go next
For related self-employed and small-plan reading, see what a 401(k) match actually means, the thrift savings plan explained, and how a 457(b) plan works.