Which statement best contrasts qualified and non-qualified retirement plans?

• A. Qualified plans provide tax benefits and may be offered to all employees
• B. Non-qualified plans are exactly the same as qualified plans
• C. Qualified plans are not regulated
• D. Non-qualified plans offer more favorable tax status than qualified plans

Answer: (A)

Understanding the difference between qualified and non-qualified retirement plans centers on tax treatment and who is covered. Qualified plans meet specific IRS/ERISA requirements, which brings tax benefits: contributions by the employer are typically tax-deductible, and the employee’s investment grows tax-deferred until withdrawal. They’re usually available to a broad group of employees, not just a few key people. Non-qualified plans do not receive the same favorable tax treatment and aren’t bound by the same nondiscrimination rules; they’re often used to tailor benefits for key employees or individuals and don’t have to cover everyone. So the statement that best contrasts them is that qualified plans provide tax benefits and may be offered to all employees.