Certified Payroll Professional Practice Exam 2025 - Free CPP Practice Questions and Study Guide

Question: 1 / 400

What is the characteristic of a non-qualified plan?

It is employer-sponsored with formula-based benefits

It is for the exclusive benefit of employees

It promises future benefits for currently performed services

A non-qualified plan is characterized by promising future benefits for currently performed services. Unlike qualified plans, which must meet specific requirements set by the Internal Revenue Code (Option D), non-qualified plans do not have the same regulatory restrictions. Option A is incorrect because formula-based benefits can be found in both qualified and non-qualified plans. Option B is incorrect because non-qualified plans may not necessarily be for the exclusive benefit of employees.

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It is subject to Internal Revenue Code requirements

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