Which statement is NOT true about an employer-sponsored nonqualified retirement plan?

The statement indicating that the employer can receive a current tax deduction for any contributions made to the plan is not true in the context of nonqualified retirement plans. Nonqualified retirement plans are typically designed to provide benefits that exceed the limits set by the IRS for qualified plans.

In these nonqualified plans, the employer does not receive an immediate tax deduction for contributions. Instead, contributions are often treated as expenses for tax purposes when paid, and the actual deduction might only be realized when benefits are distributed to the employee. This distinguishes nonqualified plans from qualified plans, where contributions are tax-deductible at the time they are made.

Understanding the nature of nonqualified plans is important, as they do not enjoy the same favorable tax treatment as qualified plans. This allows employers a degree of flexibility in individuals they choose to cover, does not require them to adhere to ERISA regulations, and allows for potentially higher contributions tailored to key employees without the tax advantages associated with qualified plans.