Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

An unfunded excess benefit plan is a type of retirement plan that is designed to provide benefits above and beyond the limits set by the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. These plans are typically used by employers to offer additional retirement benefits to high-level executives or key employees without the need to comply with the extensive regulations that govern most qualified retirement plans under ERISA.

The key characteristic of unfunded excess benefit plans is that they are not funded, meaning they do not have dedicated assets set aside to pay out benefits. Instead, the company promises to pay the benefits directly from its general assets as they come due, which is why they fall outside the purview of ERISA. ERISA imposes certain requirements on plans in areas such as reporting, disclosure, and fiduciary responsibilities, but unfunded plans do not meet the criteria that would typically bring them under ERISA's regulations.

On the other hand, other types of plans mentioned, such as defined benefit plans and employee stock ownership plans, are subject to ERISA requirements because they generally have funding obligations and must follow specific regulatory guidelines to ensure the protection of participants' benefits. Top hat plans, while also having some exemptions, still need to comply with certain aspects of ER