Definition

Nondiscrimination

Rules preventing qualified plans from disproportionately favoring highly compensated employees.

Full definition

Qualified plans, including those containing a 401(h) account, must satisfy coverage and nondiscrimination rules so that benefits do not disproportionately favor highly compensated employees. For 401(h), this includes coverage, classification, and benefits testing.

Related terms

Key Employee

A defined IRC category that triggers special funding limits inside 401(h) accounts.

401(h) Account

A separate sub-account inside a qualified pension or annuity plan used to pay certain retiree medical benefits.

Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.