What is the primary purpose of Non-Qualified Plans?

Non-Qualified Plans primarily serve to provide additional retirement benefits specifically for executive-level employees. These plans are not subject to the same regulatory requirements as Qualified Plans, which allows organizations greater flexibility in designing benefits that may be tailored specifically for high-level employees. This can include higher contribution limits, the ability to offer greater benefit amounts, and a wider array of investment options.

Unlike Qualified Plans that must adhere strictly to IRS rules, Non-Qualified Plans allow employers to offer tailored financial incentives that can attract and retain top talent. These benefits are often crucial for executives who may exceed the contribution limits set by Qualified Plans or who need more comprehensive retirement planning options due to their higher earnings. As a result, Non-Qualified Plans are a strategic tool used by organizations to enhance compensation packages for key employees, ensuring that their retirement needs are met beyond what traditional plans offer.