Non-Qualified Plan
What Does Non-Qualified Plan Mean?
A non-qualified plan is an employee retirement plan that does not comply with the requirements of the Employee Retirement Income Security Act (ERISA). These plans are typically designed for higher-income employees, such as company executives.
Insuranceopedia Explains Non-Qualified Plan
A non-qualified plan is often offered to high-ranking employees when the employer cannot make them partners or part-owners of the company. These plans typically provide more generous retirement benefits compared to those governed by the Employee Retirement Income Security Act (ERISA). While ERISA plans are available to all employees, enrollment in a non-qualified plan is at the employer’s discretion.
Non-qualified plans are tax-deferred, meaning taxes are not paid until retirement when benefit distributions typically begin.
