Qualified Retirement Plan

Everyone has a retirement plan of some sort. Maybe you plan to comb the beach with a metal detector looking for doubloons. Or maybe you’re just gonna wait for your rich Uncle Harry to die.

These might be good plans. However, you can't get any tax benefits from investing in these. You can't deduct your metal detector costs, or expenses related to the poison you've been surreptitiously slipping into Uncle Harry's food. To get those sweet, sweet tax breaks, you need to contribute to a Qualified Retirement Plan. That's what "qualified" means here. It is qualified via jumping through all kinds of lawyerly paper filings to the government that qualify it for favorable tax treatment.

These are set up by employers for their employees. The contributions you make to the plans get certain tax incentives, lowering income tax burdens for those contributing.