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The Federal government has imposed a series of requirements on most of the private sector employment-based retirement plans. These requirements must be met in order for the plan to qualify for favorable tax treatment. That is why they are termed "qualified plans."
These qualifications were put in place to ensure that the employees participating in the plan actually receive the pension benefits promised by their employer. One qualification is that the tax benefit of the plan is passed along to both the rank and file workers in addition to the owners of the company and other highly compensated employees. This prevents the owners of a company from using a pension plan to shelter the profits of a company from income taxes.
Other forms of this term include - qualified plans |
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