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A Non-Qualified Plan is used by sponsors to reward selected individuals and, although not restricted by Profit Sharing and 401(k) rules established by the IRS, has its own set of IRS rules.

Unlike Qualified Plans in which the employer may take an immediate deduction for contributions, so long as Qualified Plan Rules are followed, a Non-Qualified plan contribution is not deducted until non-forfeitable by the individual, upon which time the contribution is taxable to the individual.