Qualified Retirement Plan
A qualified retirement plan is a plan that meets requirements of the Internal Revenue Code and as a result is eligible to receive certain tax-deferred benefits. The employees pay taxes only when they draw the money out. When employers make payments to such plans, they receive certain deductions and other tax benefits.
Qualified retirement plans build up savings, which are paid out at retirement or on termination of employment. The IRS has strict requirements that a plan must meet in order to receive the tax benefits: It must offer life annuities, it must maintain sufficient funding levels, it must be administered according to the plan document, benefits must end at retirement age, benefits may not be forfeited once earned, it may not discriminate in favor of highly-compensated employees, and it must be insured by the Pension Benefit Guaranty Corporation.