A qualified retirement plan meets the requirements of the IRC and ERISA and qualifies for important tax benefits that are not realized under non-qualified plans. These include the exclusion of plan contributions from current income tax, as well as tax incentives to employers contributing to the retirement plans of their employees. Moreover, annuities and other funds placed in qualified retirement plans — IRAs, 401Ks, SEPs, 403bs, and the others described here — are deducted from the owner's income before taxes are computed (with the exception of "Roth" IRA's).

Since qualified plan contributions were made with pre-tax money, the owner has not paid income tax on any annuity or other deposited funds. And, because in all types of qualified plans interest accrues tax deferred until it is withdrawn, the owners will only pay income tax on premiums paid and interest earned when the money is taken out of the plan. Moreover, because many Seniors are delaying retirement for various reasons, including the need to earn extra income, qualified plan earnings can be deferred even further by transferring them from one qualified plan to another without creating a taxable event by using a 1035 transfer order form. This is called a "rollover."

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