Nonqualified plan

Nonqualified plan

A retirement plan that does not meet the IRS requirements for favorable tax treatment.

Nonqualified Plan

An annuity or pension plan that one buys individually rather than through an employer. Nonqualified plans are not subject to the same restrictions as qualified plans. As a result, withdrawal penalties are smaller or non-existent, and one may continue to make contributions to a more advanced age (sometime until the annuitant is over 80). In the United States, specific restrictions on nonqualified plans are set at the state level. The IRS does not regulate them; as a result, contributions are not tax-deductible, but earnings still are.
References in periodicals archive ?
Adopting a nonqualified plan tailored to unique groups of individuals can help sponsors address this problem-and is a solution advisers can present.
An important part of our practice involves helping clients manage the constantly changing, increasingly complicated employee benefits area, including qualified and nonqualified plan compliance, multiemployer plan issues, ERISA fiduciary responsibilities, executive compensation matters, and employee benefit issues in connection with mergers and acquisitions.
5 million in annual revenue, ACI provides design, consultation and administration of 401(k) plans, profit-sharing plans, nonqualified plan administration and traditional defined benefit plans to more than 400 clients.
This is an option for companies that have maxed out existing qualified plans, decided that qualified plans are too expensive, or concluded that a nonqualified plan does not create income tax advantages for the owner.
transfer benefits from a nonqualified plan into a qualified plan.
The 2009 supplement includes information on the division of benefits by the IRS, DOL, Pension Benefit Guaranty Corporation, and other government agencies; the transfer of retirement assets from the dissolution of same-sex marriages, domestic partnerships, and civil unions; post death issues and survivor rights; more coverage of church-sponsored plans and Indian tribal plans; reexamination of old rules through recent court rulings; controversial aspects of the allocations between participants and alternate payees; the latest court decisions on the division of qualified and nonqualified plan benefits; administration procedures and errors; recent developments in spousal and child support, and maintenance obligations; and recent legislation.
However, a nonqualified plan can provide tax deferral for the employee, as well as meet employer and employee compensation and financial planning objectives.
In short, a nonqualified plan should be considered when an employer wants to decrease or eliminate the costs associated with a qualified plan.
Put your nonqualified plan into an irrevocable trust even though this causes immediate taxation.
After some minor edits, they distribute their RFP to qualified plan and nonqualified plan providers alike, often with only a one-week turnaround deadline.
Many companies will design a nonqualified plan utilizing the security provisions of a Rabbi Trust.