A Non-Qualified Plan is a type of tax-deferred, employer sponsored retirement plan that falls outside of the Employee Retirement Income Security Act (ERISA) guidelines. Non-qualified plans are designed to meet specialized retirement needs for key executives and other select employees.
There are different types of non-qualified plans including deferred compensation plans and executive bonus plans, among other options. At CONSULTIVA we help your organization choose the option that helps recruit and retain top talent and key personnel.￼￼￼￼
Deferred Compensation Plans
Are plans designed to provide executives with supplemental retirement income. They allow for the earnings to accumulate tax deferred, with the income received at retirement taxed as ordinary income.
Key Person Plans
Can consist of issuance of a life insurance policy with premiums paid by the employer as a bonus to the executive. Premium payments are considered compensation and are deductible to the employer, while the bonus payments are taxable to the executive.