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empben

Please Define

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What exactly does non qualified mean in "A 457(b) plan is a non-qualified tax-deferred compensation plan that works very much like other retirement plans..."? Does it have something to do with who can enroll in a 457(b)?

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The term "qualified plan," when used to describe retirement plans, generally means that the plan meets the qualification requirements found in section 401(a) of the Internal Revenue Code. This term is usually applied to pension plans, profit sharing plans, 401(k) plans, etc. A 457 plan doesn't meet the provisions of the aforementioned IRC section, so it's not a "qualified plan" under the common definition of "qualified."

 

However, 457 plans do have to satisfy another section of the Code (namely section 457). One of those requirements is a limitation on the type of employers that can establish a 457 plan which, in turn, establishes who is eligible to participate.

 

I hope this helps clarify the matter for you.

 

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