Which type of plan must meet certain requirements set by the IRS including non-discrimination against prohibited groups?

Qualified plans are retirement plans that must adhere to specific regulations set by the Internal Revenue Service (IRS). One critical requirement is that these plans must not discriminate in favor of higher-paid employees, shareholders, or owners, ensuring that benefits are available fairly to all eligible employees. This principle of non-discrimination is designed to encourage widespread participation and inclusion among employees of varying income levels.

By meeting these IRS guidelines, a qualified plan also receives favorable tax treatment. Contributions made to these plans can be tax-deferred, and earnings on the investments in these plans can grow tax-free until they are withdrawn. The stringent adherence to these standards is what differentiates qualified plans from nonqualified plans, which do not have to meet the same regulatory requirements and can potentially discriminate in favor of higher earners.

The other options listed do not have the same overarching requirement regarding non-discrimination. Nonqualified plans can be tailored to specific employees without the same oversight. Employee Stock Ownership Plans (ESOPs) and Individual Retirement Accounts (IRAs) have their respective rules and benefits but do not encompass the same broad non-discrimination requirements applicable to qualified plans.