Skip to main content
March 14, 2024
Question

Is a pension qualified or non qualified plan if only the employer paid into it?

  • March 14, 2024
  • 1 reply
  • 0 views
No text available

1 reply

DMarkM1
March 14, 2024

Having only employer contributions does not make a plan qualified or non-qualified.  There are qualified and non-qualified plans that may only have employer contributions.  According to the IRS, you should contact your employer to determine if the your pension is from a qualified plan.  If your plan is a 401 plan it is likely qualified. 

 

A plan is qualified if provisions in the plan document satisfy the requirements of the Code.  Section 401 governs qualified retirement plans. Below is an extract from Section 401.

 

"I.R.C. § 401(a)(1)

if contributions are made to the trust by such employer, or employees, or both, or by another employer who is entitled to deduct his contributions"

 

Section 457 plans are examples of non-qualified plans as they are outside the qualified plan rules.  The contributions made to these types of plans are taxable to the employee but usually allow the employee to defer taxes until retirement or when they actually receive the benefits.  

 

Other nonqualified plans:

  • Deferred-compensation plans
  • Executive bonus plans
  • Split-dollar life insurance plans
  • Group carve-out plans
**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"