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More About Nonqualified Plans

October 11, 2011

The four major types of nonqualified plans, according to Investopedia.com, are:

  • Deferred compensation plans
  • Executive bonus plans
  • Group carve-out plans
  • Split-dollar life-insurance plans

Nonqualified deferred compensation plans are not funded by the employer and therefore, participants are considered general creditors of the company. This lack of a guarantee that the deferred compensation plan will be paid is one of the biggest drawbacks of these plans, according to Fidelity's LifeDesign Financial Answer Center.