RPA 2 – Lesson 3 (2025/2026 Latest Exam
Prep) | Retirement Planning Study Guide &
Verified Practice Q&A
What is a Keogh plan also known as? - correct answer(3.1) HR-10 plan
What entities can establish a Keogh plan? - correct answer(3.1) Sole proprietor or
partnership
What type of plan can only be established by a sole proprietor or partnership? - correct
answer(3.1) Keogh
Which of the following entities can establish a Keogh plan?
I. Common-law employee
II. Individual partner
III. Sole proprietor - correct answer(3.1) III. Sole proprietor
Which of the following entities can establish a Keogh plan?
I. 5 percent owner of a company
II. Corporate employee
III. Partnership - correct answer(3.1) III. Partnership
If an owner/employee wishes to establish and participate in a Keogh plan, he or she
must cover which employees? - correct answer(3.1) All employee except those who are:
-Under 21 years old
-Have completed less than one year of service
True or False: A Keogh plan is prohibited from setting waiting periods for vesting. -
correct answer(3.1) False. A Keogh plan may use a two-year waiting period if the plan
provides 100 percent vesting after the two-year period.
A __-year waiting period can be used if a Keogh plan provides 100 percent vesting
after. - correct answer(3.1) two
Must Keogh plans meet the same nondiscrimination coverage and participation
requirements as other qualified plans? - correct answer(3.1) Yes
True or False: A Keogh plan can be established as a defined contribution but not a
defined benefit plan. - correct answer(3.2) False. A Keogh plan can be established as
either a defined benefit or defined contribution plan.
, If a Keogh plan is established as a defined benefit plan, what is the contribution limit? -
correct answer(3.2) The limit is the lesser of
-100 percent of the average of the participant's highest three consecutive calendar
years of earnings
-$205,000 (as of 2013), indexed for inflation
If a Keogh plan is established as a defined contribution plan, what is the maximum
annual contribution allowed? - correct answer(3.2) The maximum annual contribution is
the lesser of:
-100 percent of the participant's compensation
-$51,000 (as of 2013), indexed for inflation
How is a self-employed person's compensation defined under a Keogh plan? - correct
answer(3.2) The person's earned income minus one-half of the self-employment tax, not
to exceed $255,000 (as of 2013)
How is the deduction limit for an owner under a Keogh plan calculated? - correct
answer(3.3) The owner's deduction for contributions for him- or herself is based on:
earned income - 1/2 self-employment tax - contributions.
Are loans from Keogh plans available to self-employed individuals? - correct
answer(3.4) Yes. They are permitted on the same basis as for qualified retirement
plans.
Which of the following plans allow loans?
I. IRA
II. Keogh
III. Savings incentive match plan for employees (SIMPLE) - correct answer(3.4) II.
Keogh
Which of the following plans allow loans?
I. Keogh
II.Savings incentive match plan for employees (SIMPLE)
III. Simplified employee pension (SEP) - correct answer(3.4) I. Keogh
Can Keogh plan assets be rolled over into other tax-deferred retirement savings
vehicles? - correct answer(3.5) Yes. Keogh plans permit tax-free rollovers.
Are Keogh plan rollovers taxed? - correct answer(3.5) No. Keogh plans permit tax-free
rollovers
Into what five types of plans can Keogh assets be rolled over? - correct answer(3.5)
1. Another Keogh plan
2. 403(b)
3. 457(b)
4. Employer-sponsored retirement plan
Prep) | Retirement Planning Study Guide &
Verified Practice Q&A
What is a Keogh plan also known as? - correct answer(3.1) HR-10 plan
What entities can establish a Keogh plan? - correct answer(3.1) Sole proprietor or
partnership
What type of plan can only be established by a sole proprietor or partnership? - correct
answer(3.1) Keogh
Which of the following entities can establish a Keogh plan?
I. Common-law employee
II. Individual partner
III. Sole proprietor - correct answer(3.1) III. Sole proprietor
Which of the following entities can establish a Keogh plan?
I. 5 percent owner of a company
II. Corporate employee
III. Partnership - correct answer(3.1) III. Partnership
If an owner/employee wishes to establish and participate in a Keogh plan, he or she
must cover which employees? - correct answer(3.1) All employee except those who are:
-Under 21 years old
-Have completed less than one year of service
True or False: A Keogh plan is prohibited from setting waiting periods for vesting. -
correct answer(3.1) False. A Keogh plan may use a two-year waiting period if the plan
provides 100 percent vesting after the two-year period.
A __-year waiting period can be used if a Keogh plan provides 100 percent vesting
after. - correct answer(3.1) two
Must Keogh plans meet the same nondiscrimination coverage and participation
requirements as other qualified plans? - correct answer(3.1) Yes
True or False: A Keogh plan can be established as a defined contribution but not a
defined benefit plan. - correct answer(3.2) False. A Keogh plan can be established as
either a defined benefit or defined contribution plan.
, If a Keogh plan is established as a defined benefit plan, what is the contribution limit? -
correct answer(3.2) The limit is the lesser of
-100 percent of the average of the participant's highest three consecutive calendar
years of earnings
-$205,000 (as of 2013), indexed for inflation
If a Keogh plan is established as a defined contribution plan, what is the maximum
annual contribution allowed? - correct answer(3.2) The maximum annual contribution is
the lesser of:
-100 percent of the participant's compensation
-$51,000 (as of 2013), indexed for inflation
How is a self-employed person's compensation defined under a Keogh plan? - correct
answer(3.2) The person's earned income minus one-half of the self-employment tax, not
to exceed $255,000 (as of 2013)
How is the deduction limit for an owner under a Keogh plan calculated? - correct
answer(3.3) The owner's deduction for contributions for him- or herself is based on:
earned income - 1/2 self-employment tax - contributions.
Are loans from Keogh plans available to self-employed individuals? - correct
answer(3.4) Yes. They are permitted on the same basis as for qualified retirement
plans.
Which of the following plans allow loans?
I. IRA
II. Keogh
III. Savings incentive match plan for employees (SIMPLE) - correct answer(3.4) II.
Keogh
Which of the following plans allow loans?
I. Keogh
II.Savings incentive match plan for employees (SIMPLE)
III. Simplified employee pension (SEP) - correct answer(3.4) I. Keogh
Can Keogh plan assets be rolled over into other tax-deferred retirement savings
vehicles? - correct answer(3.5) Yes. Keogh plans permit tax-free rollovers.
Are Keogh plan rollovers taxed? - correct answer(3.5) No. Keogh plans permit tax-free
rollovers
Into what five types of plans can Keogh assets be rolled over? - correct answer(3.5)
1. Another Keogh plan
2. 403(b)
3. 457(b)
4. Employer-sponsored retirement plan
