Keogh Plan Explained: Retirement Strategy for Australians with US Income (2025)

If you’re an Australian earning self-employment income from the United States, you might have heard of the Keogh Plan. While it’s a term more familiar to American accountants than Aussie superannuation experts, understanding how a Keogh Plan works can be a game changer for dual-residents or expatriates with trans-Pacific income streams. Let’s break down what a Keogh Plan is, how it fits into the 2025 retirement landscape, and what Australians should consider before opening or maintaining one.

Keogh Plans: The Basics and 2025 Regulatory Updates

The Keogh Plan, sometimes called an HR-10 plan, is a US tax-deferred retirement plan for self-employed individuals and unincorporated businesses. Established by US Congress in 1962, it’s designed to help freelancers, contractors, and business owners save for retirement with higher contribution limits than IRAs.

• Eligibility: Sole proprietors, partnerships, and LLCs (not corporations) with self-employment income in the US.

• Types: Defined Contribution (profit-sharing or money purchase) and Defined Benefit plans.

• Contribution Limits (2025): For defined contribution Keogh Plans, you can contribute up to 25% of compensation or $69,000 (whichever is less), up from $66,000 in 2024 due to inflation adjustments.

• Tax Treatment: Contributions are tax-deductible in the US and grow tax-deferred until withdrawal.

Recent US tax reforms and retirement plan harmonisation have reduced the popularity of Keogh Plans, with many advisors recommending SEP-IRAs or Solo 401(k)s for simplicity. However, Keogh Plans remain relevant for Australians with legacy accounts or those who want maximum flexibility and higher contribution ceilings.

Keogh Plans vs. Australian Superannuation: What Aussies Need to Know

Australians with US self-employment income face a complex mix of rules. The Australian Taxation Office (ATO) and the US IRS treat retirement accounts differently. Here’s what to watch out for in 2025:

• Double Taxation Risk: While Keogh contributions are tax-deductible in the US, Australia may tax contributions and earnings unless the account qualifies for exemption under the US-Australia tax treaty.

• Foreign Income Reporting: The ATO requires Australians to declare global income, including Keogh distributions, which may be taxed at marginal rates.

• Superannuation Comparison: Superannuation guarantees in Australia are employer-funded, while Keogh Plans are self-funded. Contribution limits and preservation rules differ significantly.

Example: If you’re an Australian consultant paid by a US company, you could open a Keogh Plan for your US-source income. But when you return to Australia, you’ll need to manage the account carefully to avoid unnecessary tax or compliance headaches.

Practical Strategies: Making the Most of a Keogh Plan in 2025

For Australians who qualify, a Keogh Plan can still be a powerful tool for building US-dollar retirement savings, especially if you plan to spend part of your retirement in the US or maintain cross-border financial ties. Here’s how to optimise your Keogh Plan in 2025:

• Keep Up with US Contribution Limits: Maximise annual contributions to take full advantage of tax deferral, especially with the 2025 limit increase.

• Coordinate with Your Super: Consider how your Keogh Plan fits into your overall retirement strategy, including Australian superannuation and other international accounts.

• Review Tax Treaty Provisions: Consult a cross-border tax specialist to navigate US-Australia treaty benefits and avoid double taxation on distributions.

• Plan for Distributions: Keogh Plans generally require minimum distributions after age 73 (per 2025 IRS rules), so factor this into your cash flow planning.

Recent changes to US retirement legislation, such as the SECURE 2.0 Act, have introduced more flexibility for rollovers and delayed required minimum distributions, which can benefit Australians with long-term US connections.

Conclusion: Is a Keogh Plan Right for You?

For Australians with US self-employment income, a Keogh Plan is a legacy retirement vehicle that still offers unique advantages in 2025. However, it comes with complex tax considerations and requires careful cross-border planning. Whether you’re a consultant splitting your time between Sydney and San Francisco, or an Aussie entrepreneur with a US side hustle, understanding the ins and outs of Keogh Plans could mean thousands more in your retirement nest egg.