A more thorough explanation:

A Keogh plan is a type of retirement plan for self-employed individuals and employees of some private businesses. It allows tax-deferment for contributions and benefits, similar to other retirement plans. The employee does not pay taxes for contributions under the annual limit until retirement.

For example, if an employee earns $100,000 a year and contributes $10,000 to their Keogh plan, they only pay taxes on $90,000 of their income that year.

Keogh plans have limits on withdrawals, with employees unable to make withdrawals until reaching 59 ½ and required to begin withdrawing at age 72. If an employee makes withdrawals earlier, they are subject to a 10% extra tax.

There are different types of Keogh plans with varying structures and contribution limits. One type is a defined benefit Keogh plan, where the employer ensures a fixed payment to the employee after retirement based on multiple factors. Another type is a defined contribution plan, where employee and employer contributions to the plan may be up to $61,000 a year as of 2022.

For example, if an employee contributes $10,000 to their Keogh plan and their employer contributes $20,000, the total contribution for that year is $30,000.

The name Keogh plan comes from Representative Eugene James Keogh, who introduced the legislation that created the plans in 1962. The Internal Revenue Service (IRS) and common parlance no longer use the term and instead refer to Keogh plans as qualified retirement plans or H.R. 10 plans.