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There are 2 basic types of Keogh Plans: defined-benefit, and defined-contribution.
In a defined-contribution plan, a fixed contribution (percentage of total paycheck or a fixed sum) is made per pay period.
The defined-benefits plan is more complex. It relies on an IRS formula to calculate the rate of contributions. It may be set up as a profit-sharing plan, where the pension that one can withdraw after retirement depends on how much they invest in the plan while they worked.
In either case, as in other retirement plans, the funds in the plan can be invested in stocks, bonds, mutual funds, etc.
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