Nonqualified plans, in the context of employee benefits, are employer plans that do not meet IRS qualification requirements. They are benefit plans that either do not meet the IRS Code or the ERISA requirements. The plans are funded by employers and are more flexible, but they do not have the tax benefits of qualified plans. Benefits are paid at the retirement age in the form of annuities, which are taxed as ordinary income tax, or in lump sum payments, which can be transferred into an IRA to defer taxes.
Non-qualifed plans may include, among others:
