Keogh Plan Distribution Rules: What You Need to Know for Retirement as a Self-Employed Individual or Small Business Owner

Under Keogh rules, distributions from a Keogh Plan must commence the year after the individual turns age:

72

The Keogh Plan, also known as the HR-10 Plan, is a retirement plan designed for self-employed individuals or small business owners. Keogh rules state that distributions from a Keogh Plan must commence by a specific age, which is determined by the type of Keogh Plan.

For Keogh defined contribution plans, such as profit sharing plans, money purchase plans, or target benefit plans, distributions must commence by April 1 of the year following the calendar year in which the individual turns age 72.

For Keogh defined benefit plans, such as pension plans, distributions must commence by April 1 of the year following the calendar year in which the individual turns age 72 or by the individual’s normal retirement age, whichever is later.

It’s important to note that the age at which distributions from a Keogh Plan begin is based on the age of the individual, not the age at which they retire. Additionally, failure to take the required minimum distribution from a Keogh Plan can result in significant penalties, so it’s crucial to comply with the distribution rules.

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