In essence, a non-qualified retirement plan is a contract to provide pension benefits. Individuals can create one, but most are created by employers.
Contributors to non-qualified plans don't get the same tax benefits as contributors to qualified plans, such as 401(k)s, do.
But because they are not constrained by the codes, non-qualified plans can be much more flexible in setting benefit amounts and timing payouts. Most are created to attract and retain highly paid employees.
LifeWire, a part of The New York Times Company, provides original and syndicated online lifestyle content. David Fisher is a freelance writer based in Bend, Ore. In addition to 25 years as a writer and editor, he has worked as a professional financial adviser.
