Certified Payroll Professional Practice Exam

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Prepare for the Certified Payroll Professional Exam with comprehensive flashcards and multiple choice questions. Each question is accompanied by detailed hints and explanations to aid your understanding. Get ready to ace your Certified Payroll Professional Exam!

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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
It is subject to Internal Revenue Code requirements

The correct answer is: 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.