Qualified vs. Non-Qualified Plans
The Need for Non-Qualified Plans
The Plan Design Process

Qualified vs. Non-Qualified Plans

What are Qualified Plans?

Types of Qualified Plans

	Defined Benefit Pension Plan
	Defined Contribution Plan
		Money Purchase Pension Plan
		Profit Sharing Plan
		401(k) Plan

Characteristics of Qualified Plans:

• Tax-deductible contributions
• Tax-deferred earnings on plan assets
• Plan assets held in trust
• Employees protected under ERISA

Why don't Qualified Plans work for Executives?

Federal Limits on Qualified Plans*:
(Considered annual compensation: $ 200,000)

Total Defined contribution limit: $ 40,000
401(k) individual deferral limit: $ 11,000
Additional plan sponsor contribution limit: $ 29,000

*Federal Limits on Qualified Plans for 2002

What are Non-Qualified Plans?

Types of Non-Qualified Plans

• Deferred Compensation Plans
• Supplemental Employee Retirement Plans (SERP)
• Non-Qualified Stock Option Plans

Characteristics of Non-Qualified Plans

Non-Qualified Plans allow:

• Companies to select which executives participate
• Companies to decide the benefit level
• Companies to decide the plan provisions
• Contributions to be deferred for any length of time up to and including retirement
• Deferrals to be allocated across a range of investment options
• Participants to schedule the distribution of account balances as a lump sum or spread out over 2 – 10 years
• Participants to defer up to 100% of their salary and bonus

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