Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 - Free CRPC Practice Questions and Study Guide

The correct choice is the type of nonqualified plan known as funded excess benefit plans. ERISA, the Employee Retirement Income Security Act, generally sets certain standards for employee benefit plans, including rules around vesting. However, nonqualified plans, such as funded excess benefit plans, are specifically designed to provide benefits that exceed the limits imposed by qualified plans, and they do not need to meet the same ERISA vesting requirements as qualified plans.

Funded excess benefit plans are typically set up for key employees and can provide retirement benefits based on a formula intended to supplement the benefits from qualified plans. Since they fall outside the regulatory framework of ERISA, the specific vesting standards that apply to qualified plans do not apply to them.

On the other hand, unfunded excess benefit plans may also avoid certain ERISA requirements, but they often operate under different principles and may not have the same funding characteristics, which distinguishes them from funded plans. Qualified profit-sharing plans and cash balance plans are both classified as qualified plans under ERISA, which means they are subject to strict vesting requirements to ensure that employee benefits are earned and protected.