Non-Qualified Plan

Posted in Finance, Accounting and Economics Terms, Total Reads: 241
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Definition: Non-Qualified Plan

Any sort of tax-deferred, employer-sponsored retirement program that falls outside of worker retirement financial gain security act (ERISA) tips. Non-qualified plans square measure designed to satisfy specialised retirement wants for key executives and different choose staff. These plans {also square measure} exempt from the discriminatory and unstable testing that qualified plans are subject to.


Explanation

Millions of staff other than retirement by deferring some of their compensation into associate degree employer-sponsored, tax-deferred savings set up. the bulk of those square measure called qualified plans and represent the jurisdiction of ERISA pointers.


For example, these necessities will pertain to the kind and variety of staff United Nations agency participate, in addition because the quantity of cash that's placed within the set up by rank-and-file staff as compared to executives and house owners.


However, there square measure times once a professional set up won’t accomplish associate degree employer’s goals. for example, a corporation might want to defer a larger quantity for retirement than is permissible within a professional set up, or reward either themselves or a key worker with extra advantages and compensation that may not be offered to the bulk of staff. In cases like these, non-qualified plans square measure accustomed reach specialised objectives.

 

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