Which statement is true regarding Qualified Plans?

Qualified plans are retirement plans that meet specific requirements set by the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act (ERISA). One of the key characteristics of qualified plans is that they must receive approval from the IRS to ensure they adhere to the tax code and maintain certain standards. This approval allows the contributions made to these plans to be tax-deductible for both the employer and the employees, which is a significant benefit.

Additionally, qualified plans are designed to provide retirement benefits to a broad group of employees without discriminating in favor of highly compensated employees. This means they must provide benefits to all eligible employees, not just a select few, thereby ensuring fairness and compliance with federal regulations.

The tax-deductibility of contributions and the inclusive nature of the plan suggest that options relating to discrimination, non-deductible contributions, or exclusivity to individual investors do not accurately reflect the nature of qualified plans. These plans are intended to serve a wide range of employees and offer tax advantages, making the requirement for IRS approval essential to their operation and acceptance in the tax code.