What is the difference between saving money in my companys “qualified” retirement plan and depositing money into a “non-qualified” savings plan?
The biggest difference is your plan’s tax deferral. An ordinary savings account or mutual fund does not allow you to save on a tax-deferred basis (pre-tax contributions and tax-deferred growth on those contributions). In an ordinary account, the money you save has already been taxed and you continue to pay tax on any earnings in that account. However, the money you contribute to your company-sponsored retirement plan is with pre-tax dollars. Further, the money grows tax-deferred until you withdraw it – usually in retirement, when you may be in a lower tax bracket.
