How do Nonqualified Plans primarily differ from Qualified Plans?

Nonqualified Plans primarily differ from Qualified Plans in that they do not need to be approved by the IRS. This characteristic allows employers greater flexibility in designing their benefit offerings without having to adhere to the strict regulatory requirements that govern Qualified Plans.

Qualified Plans must comply with various IRS rules, including nondiscrimination and contribution limits, ensuring that they benefit a broad group of employees rather than favoring high earners. In contrast, Nonqualified Plans can be tailored to meet the specific needs of employers and high-level employees, making them more versatile but less regulated.

Options regarding IRS approval, discrimination against employees, and exclusivity for low-income employees relate to the regulations that apply to Qualified Plans, which are structured to protect broader employee interests and ensure equitable access. Nonqualified Plans, being less regulated, allow for more tailored approaches without these constraints.