Which of the following statements about non-qualified retirement plans is accurate?

• A. They may have some tax benefits but are not protected by government regulations
• B. They are always guaranteed by the government
• C. They have no tax implications
• D. They are the same as qualified plans

Answer: (A)

Non-qualified retirement plans are arrangements that don’t meet the IRS/ERISA rules that give qualified plans their tax advantages and protections. Because they miss those protections, they aren’t guaranteed by the government, and funding/vest­ing can be less secure with limited creditor protection. They can still offer some tax benefits, such as tax-deferred growth on plan earnings or compensation deferral for high earners, but these benefits are weaker than those of qualified plans. Distributions are generally taxed as ordinary income when received. So the statement that they may have some tax benefits but are not protected by government regulations is accurate, while the other options don’t fit: they’re not government-guaranteed, they do have tax implications, and they aren’t the same as qualified plans.