Types of Non-Qualified Retirement Plans

Non-Qualified Retirement Plans

Non-Qualified Retirement Plans are any type of tax-deferred, employer-sponsored retirement plan that falls outside of the employee retirement income security act (ERISA) guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees. There are four major types of non-qualified plans, including:

Non-Qualified Retirement Plans

  • Deferred compensation plans
  • Executive Bonus Plans
  • Group Carve-out plans
  • Split-dollar life insurance plans

The contributions made to these plans are usually nondeductible to the employer, and are usually taxable to the employee as well. However, they allow employees to defer taxes until retirement, when they are presumably in a lower tax bracket. Non-qualified plans are often used to provide specialized forms of compensation to key executives or employees in lieu of making them partners or part owners in the company or corporation.



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