Non-Qualified Plans (W-2)

What is Non-Qualified Plans (W-2)?

Non-qualified plans are employer-sponsored retirement savings arrangements that do not meet the requirements of the Employee Retirement Income Security Act (ERISA). Because they are exempt from ERISA’s testing and contribution limits, these plans offer greater flexibility in how benefits are structured and distributed.

Why Non-Qualified Plans (W-2) Matters

Organisations primarily use non-qualified plans to attract and retain key executives and highly compensated employees by providing supplemental retirement income beyond what qualified plans allow. While contributions are tax-deferred, the deferred compensation is reported on the employee’s W-2 when distributed and is subject to income tax at that time.