Nonqualified Plan
Employee benefit plan that does not have the federal tax advantages of a qualified pension plan, in which employers receive a federal tax deduction for contributions paid into the plan on behalf of their employees. For an employer, not having a tax deduction can be a serious disadvantage, but a nonqualified plan has these advantages:
- otherwise discriminatory coverage for some employees is allowed.
- benefits can be allocated to certain employees whom the employer wishes to reward. The result could be that the total cost of the benefits for a particular group of employees may be less under a nonqualified plan than for all employees under a qualified plan.
Popular Insurance Terms
Interest earned but not yet paid for a period of time that has elapsed since the last interest payment. ...
Assumption of liability through contractual agreement by one party, thereby eliminating liability on the part of another party. An example is a railroad sidetrack agreement with a ...
difference between the face value of a permanent life insurance policy and its accrued cash value. The pure cost of protection is based on this difference. For example, if the face value ...
Plan under the employee retirement income security act of 1974 (ERISA) for employees who are less than 50% vested. An employee must be permitted to buy back retirement benefits lost because ...
Same as term Contingent Business Income Coverage Form: coverage for loss in the net earnings of a business if a supplier business, subcontractor, key customer, or manufacturer doing ...
Investment risk associated with the possibility that there is a rise in the interest rates after a fixed income security has been purchased resulting in a decline in that security's price. ...
Legislation by a state that taxes out-of-state insurance companies operating in its jurisdiction in the same way that the state's own insurance companies are taxed in the second state. For ...
Right of an insured to make additional purchases of life insurance without having to take a physical examination or show other evidence of insurability. Additions can be bought at stated ...
Plan to control employer's health care cost through the introduction of practice guidelines or protocols for health care providers, and to improve the methods used by employers and ...
Have a question or comment?
We're here to help.