High Yield Bonds
Bonds are rated by rating agencies (e.g. Moody’s & S&P) from AAA, AA, A, BBB, BB, B, CCC, CC, C or D in terms of their projected ability to pay interest to bondholders and principal at maturity. Normally bonds rated from AAA to BBB are categorized as “high quality” or “investment grade.” Those bonds having ratings below BBB are categorized as “high yield” or in some cases “junk” bonds. Bonds having lower credit ratings must normally offer a higher yield than investment grade issues.
The Self-Employed Individuals Tax Retirement Act of 1962, Keogh Act, was the legislation that enabled self-employed individuals and their employees to enjoy many of the retirement tax advantages previously extended only to corporate employees. The Keogh Plan is often referred to as the HR-10 Plan because of the number assigned to the congressional bill.
Since 1962, the Keogh Act has undergone many amendments. Beginning Jan. 1, 1985, only a few special restrictions, which do not apply to qualified retirement plans for corporate employees, continue to apply to plans for self-employed individuals. For most purposes, these plans are now treated the same as any other plan.