NONQUALIFIED PLAN

In a qualified retirement plan, thebenefits must be offered to all employees,as in a 401(k) plan. A nonqualifiedplan, on the other hand, canbe offered to just a few key employees.One common example is adeferred-compensation plan, wheremoney is held out of your paycheckand not paid—or taxed—until a laterdate, usually when you retire and arein a lower tax bracket. There are someissues, though. One is that you can'thave access to the money and youhave to fill out forms pledging thatthe cash is truly out of your reach.Another is that you're relying on youremployer's promise to pay the deferredincome when the time comes,which could get sticky if your employerruns into financial problems.