Retirement - 46: Qualified & Nonqualified Plans Compared

Question 0

Discrimination allowed

Answer 0

Nonqualified plan

Question 1

Discrimination prohibited

Answer 1

Qualified plan

Question 2

ERISA rules generally apply

Answer 2

Qualified plan

Question 3

ERISA rules generally do not apply

Answer 3

Nonqualified plan

Question 4

Limits on benefits apply, and compensation that can be considered is limited to $260,000 in 2014

Answer 4

Qualified plan

Question 5

No limits on benefits or on compensation apply

Answer 5

Nonqualified plan

Question 6

Coverage, participation, vesting rules apply

Answer 6

Qualified plan

Question 7

Coverage, participation, and vesting rules do not apply

Answer 7

Nonqualified plan

Question 8

Employer contributions are deductible in the current year

Answer 8

Qualified plan

Question 9

Employer takes a deduction in the year the employee receives income

Answer 9

Nonqualified plan

Question 10

Earnings on assets are income-tax-deferred

Answer 10

Qualified plan

Question 11

Earnings on assets are taxable to the employer

Answer 11

Nonqualified plan

Question 12

Employee has no income until distributions are made

Answer 12

Qualified plan

Question 13

Employee has income unless the plan is unfunded or the employee has a substantial risk of forfeiture

Answer 13

Nonqualified plan

Question 14

Benefits are protected from creditors of the employer or employee

Answer 14

Qualified plan

Question 15

Benefits are subject to the employer’s creditors, and when nonforfeitable, benefits are subject to the employee’s creditors

Answer 15

Nonqualified plan

Question 16

Rollover to an IRA or qualified plan is available

Answer 16

Qualified plan

Question 17

No rollover is available, so benefits are not portable

Answer 17

Nonqualified plan