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June 21, 1965

AMA Members' Retirement Plan

JAMA. 1965;192(12):1065-1066. doi:10.1001/jama.1965.03080250043010

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Passage of Keogh Law Made AMA Plan Possible  In 1962, Congress passed the "Self-Employed Individuals Tax Retirement Act," commonly referred to as the Keogh—Smathers Law, or Keogh Law. Under this law the self-employed individual can establish a retirement plan and make annual contributions of an amount up to 10% of his annual earned net income from self-employment or $2,500, whichever is less, to a retirement fund set up under a qualified plan. Half of this annual contribution is deductible from taxable income for federal income tax purposes. Additional voluntary contributions, subject to the above 10% or $2,500 limitation, are permitted if eligible employees are included. No part of a voluntary contribution is tax deductible. However, all earnings on contributions are tax deferred until the time of distribution. The law requires that contributions also must be made on behalf of all eligible employees with three or more years service, and these

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