What type of plan allows only after-tax funds to be contributed?

A non-qualified plan allows contributions to be made exclusively with after-tax funds. This type of plan does not meet the requirements for favorable tax treatment under the Internal Revenue Code, which means that contributions made to this plan type are not tax-deductible. Instead, employees contribute with after-tax dollars, and because of this, the funds grow without being taxed again until withdrawal.

Non-qualified plans are typically used by employers to provide additional benefits to select employees, as they are not subject to the same regulatory requirements as qualified plans. This flexibility permits the employer to create custom benefits that are not available in a standard retirement or qualified plan framework.

In contrast, qualified plans, deferred compensation plans, and tax-advantaged retirement accounts often involve contributions that can offer tax deductions or favorable tax treatment, which differentiates them from non-qualified plans regarding how contributions are funded and treated for tax purposes.