Often called Profit Sharing Keoghs, these plans are designed for small businesses or the self-employed. You are allowed to contribute up to 15% of your net earnings to the account and the money isn’t taxed until you withdraw it. These plans tend to be paperwork-heavy, however, and many people who used to use Profit Sharing Keoghs now favor SEP or SIMPLE IRAs.
SEP stands for Simplified Employee Pension. SEP IRAs allow both employers and employees to contribute, provided they meet certain qualifications. The rules governing taxes on contributions and withdrawals are the same as those for a traditional IRA. Today employers can contribute and deduct up to 25% of their net income.