Mirror 401K

One specific type of Non-Qualified Deferred Compensation plan is known as a Mirror 401(k). Employers can often turn to this type of plan design in order to ensure that their qualified 401(k) passes government testing requirements and still provide their highly compensated employees with a comparable benefit.

A Mirror 401k plan enables the employer to remove highly compensated or certain key executives from the company’s qualified plan and design a separate plan that “mirrors” the provisions of the qualified 401k retirement plan. The similarities of the plans can extend to items such as a vesting schedule, employer matching contributions, and investment options. There are no discrimination testing guidelines or contribution limits for a Mirror 401k plan.