What are the eligibility requirements for a Keogh plan?

The eligibility requirements for a Keogh plan center on the business structure of the individual establishing the plan. A Keogh plan, also known as an HR-10 plan, is specifically designed for self-employed individuals, including sole proprietors and partnerships. These plans allow such business owners to set aside a portion of their income for retirement, much like a traditional pension plan.

What distinguishes the Keogh plan from other retirement plans is its targeted approach to self-employed individuals, meaning that it does not extend to employees working in a corporate setting, or to all types of business entities. Instead, it is exclusively available for those who are in sole proprietorships or within a partnership framework. This makes it a unique option within the spectrum of retirement savings plans. Business entities that do not fit this definition, such as corporations, cannot utilize a Keogh plan for their employees.

Therefore, the focus on sole proprietors and partnerships makes the option that indicates these specific groups as the only eligible participants the correct choice.