What characterizes a qualified retirement plan?

A qualified retirement plan is characterized by its adherence to specific guidelines set by the Internal Revenue Service (IRS) and the benefits that arise from this compliance. These plans offer tax advantages that can include tax-deferred growth on investments and potential tax deductions for contributions made by employers and individuals.

To be classified as "qualified," a retirement plan must meet certain standards related to participation, contribution limits, and distribution rules, among others. This structured framework not only encourages savings for retirement but also provides legal protections for plan participants.

The other options do not accurately depict the nature of qualified retirement plans. A plan that provides no tax benefits would not be considered qualified, as significant tax incentives are a fundamental characteristic. The notion of allowing unlimited contributions is also incorrect, as qualified plans have set limits to ensure fairness and compliance with federal regulations. Finally, being available only to government employees describes a specific category of retirement plans rather than the general definition of qualified plans, which can also include those offered by private employers.