Tax incentives encourage companies to offer pension programs.

Question

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Tax incentives encourage companies to offer pension programs.Some of the Employee Retirement Income Security Act (ERISA)provisions set the minimum standards required to "qualify" pension plans for favorable tax treatment.Failure to meet any of the minimum standard provisions "disqualifies" pension plans for favorable tax treatment.Pension plans that meet these minimum standards are known as qualified plans.Nonqualified plans refer to pension plans that do not meet at least one of the minimum standard provisions; typically,highly paid employees benefit from participation in nonqualified plans.The current tax treatment of qualified plans continues to provide incentives both for employers to establish plans and for employees to participate in them.

Tax Incentives Encourage Companies to Offer Pension Programs