41.6 How To Qualify a Keogh Plan or SEP Plan

You may set up a Keogh plan and contribute to it without advance approval. But since advance approval is advisable, you may, in a determination letter, ask the IRS to review your plan. Approval requirements depend on whether you set up your own administered plan or join a master plan administered by a bank, insurance company, mutual fund, or a prototype plan sponsored by a trade or professional association. If you start your own individually designed plan, you pay the IRS a fee and request a determination letter; see IRS Publication 560.

If you join a master or prototype plan, the sponsoring organization applies to the IRS for approval of its plan. You should then be given a copy of the approved plan and copies of any subsequent amendments.

To set up a SEP with a bank, broker, or other financial institution, you do not need IRS approval. If you do not maintain any other qualified retirement plan and other tests are met, a model SEP may be adopted using Form 5305-SEP.