Executive Retirement Plans

There are two types of retirement plans - qualified and non-qualified, which primarily relates to their tax treatment and governing regulations.

A qualified retirement plan is an employer sponsored plan that meets the requirements established by the Internal Revenue Service and the US Congress (IRC Section 401(a) and ERISA of 1974). Pensions, profit sharing plans, money purchase plans, cash balance plans, SEP-IRAs, SIMPLEs, and 401(k)s are all examples of qualified plans, though each type works a little differently. Corporate contributions are tax-deductible at the time they are made.

Among the other requirements, a qualified plan must provide for all eligible employees equivalently. That means the plan can't treat highly paid employees more generously than it does less well paid employees.

In contrast, a non-qualified plan may be available to some employees and not others. Contributions may be made by either the employer or the employee. Employer contributions are not deductible for tax purposes until employee benefits are paid. However, plan earnings are tax deferred until distribution. Mandatory federal rules that apply to qualified plans do not apply in the same way to non-qualified plans, though non-qualified plans are subject to regulation by IRC 409(A).

At American Benefit Corporation non-qualified plans are our specialty. More detailed information about the various types of non-qualified plans appears on the following pages.