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It's more than just a ticket. Happy Friday, amigos. Today, live Q&A. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua. I am your host. I am your fellow traveler down this road of financial freedom, and I am your friendly local financial philosopher. Here today, we try to see if we can sort truth from fiction. On each Friday that I am able to arrange the technology to record a call, I host a Friday Q&A call, and this is done in the style of a live Q&A call.

I record it and then just release it just a little bit after the call. Usually, these calls are open exclusively to patrons of the show. You can become a patron at radicalpersonalfinance.com/patron. That allows you to have easy access to these Friday Q&A shows. At the moment, the calls are not jammed that I can't get you in.

I can essentially promise you that if you want to ask a question or talk about something, raise any discussion point that you would like to do, then you can do that as a patron on a Q&A call. If you'd like to join as a patron at radicalpersonalfinance.com/patron, I would dearly love to have you there.

On today's call, I have members of my email list. From time to time, I'll try to incentivize and give an unexpected bonus to those of you who connect with me in other formats. Today's, it is for my email subscribers. All of our callers today are calling in from the email group, but of course, some of them could also be patrons.

If you'd like to join a Friday Q&A call, I would dearly love to have you call next week at radicalpersonalfinance.com/patron. We begin today with Ruha in Alabama. Ruha, welcome to Radical Personal Finance. How can I serve you today? Hi, Joshua. Thanks for taking my call today. My pleasure. I'm calling because in the next few years, we're expecting to have some pretty big medical bills, and I've been giving some thought as to whether I should use funds from our HSA to pay for them.

I'm aware that there's several reasons why the HSA makes a good long-term savings plan that you might save and hold onto until retirement age. So I guess I just wanted to see if I could get your insight on when it makes sense to use it today rather than save it for tomorrow.

How much money do you expect to need to pay out in medical expenses? About $4,000. How much money do you expect to have in the account? I'm guessing $10,000. Do you have other sources of money where you could pay for the $4,000 without going into debt? Definitely. It would be taxable money, but yes.

Are you a scrupulous record keeper? Yes. Then in that case, my understanding is I don't see any downside for you to pursue the HSA maximization strategy. So a quick little bit of background for listeners for whom this may be coming out of the blue. The health savings account is a type of tax-advantaged account that is available to people who are enrolled in a high-deductible health plan.

They first came out, I think it was under the George W. Bush administration, under President Bush II, and it was part of the idea to lower the cost of health insurance by allowing people to enroll in a high-deductible health plan and to fund some of their beginning medical expenses with tax-advantaged dollars.

What the people who study health insurance have found is when there's a zero cost for going to the doctor, people are prone to go to the doctor just about any time. By zero, I mean either literally zero or just a very low $15 or $30 copay. So people have a high utilization for their medical providers, and they don't have much personal incentive to shop around or to be more discerning with which doctor they call and when.

So in a high-deductible health plan, the idea was that we'll lower the cost of premiums for a participant, and if somebody participates in that, then because their premiums are lower, they'll have a higher upfront deductible. So high-deductible health plans usually will have at least about a $5,000 upfront deductible.

And in order to meet those expenses, they did two things. First, high-deductible health plans had to cover all preventive care. So if you were just going in for a regular checkup or some other just preventive thing, that would be covered without any out-of-pocket. And then secondly, it qualified you to participate in a health savings account, which is an account that you can put money into pre-tax.

And then as long as you use the money to pay for your medical expenses, you will be able to pay for those expenses without paying any income tax on the money. And so this became a fairly popular account. And one of the great things about it is it can have a fairly high contribution limit and is accessible to people without income qualification, but is accessible for saving for their health expenses.

The 2018 figures are for a single person. You can contribute $3,450 to the account. And as a family, you can contribute $6,850 to the account. The account also has an additional catch-up contribution of $1,000 for those who are age 55 or older. And as long as you use the money for qualified expenses, which would include any kind of health expense, even including some things like long-term care expenses, then that money could be received without any income taxes.

Another useful wrinkle to the HSA was for people who are enrolled in an HSA and for whom are enrolled as their employer, if the employer is helping them make those contributions via a payroll deduction, they can actually avoid the employment taxes on the contribution as well. So either way, if you're running as an individual writing your own check into the account or as an employer, you can avoid income taxes on the upfront contribution.

But if you're enrolled through the context of an employer, then you can avoid employment taxes. So for an employee, this can be a very helpful account because it allows you to avoid the 7.65% employee contribution for your employment taxes as well as the upfront contribution for your income taxes.

The other benefit of the account is if you don't use it for medical expenses, beginning at the age of 65, you can make distributions from the account and go ahead and pay taxes at that time. So tax-wise, it functions in that context just like a traditional IRA. You don't receive the money tax-free, you do receive the money on a tax-deferred basis.

So this has come out in the early retirement community as being a useful planning idea that's accessible for people to help them save more money in tax-qualified accounts for their retirement. And one of the ideas that has been discovered is in order to take your money out of the accounts without paying current taxes, you don't have to do that in the year that you have the expenses.

And so the idea that Ruha is referencing here is if she can pay the $4,000 of medical expenses now and just simply save those receipts, then perhaps when she turns 50 and she retires early, and that's the year that she wants to take some tax-free income, she can go ahead and use those receipts, which might be 20 years from now.

I don't know how old you are, Ruha, but I'm just making it up. Pretend that you're 20 years from now. Then at that point in time, you can go ahead and use those receipts and take your tax-free money out. So I don't see, as long as you can pay for the money, pay for the expenses out of pocket without debt, I don't see any downside.

You are still subject to legislative risk. Could the Congress change the legislation on you? Could somehow this loophole of your being able to not take the distribution in the year that you're earning, having the medical expense be eliminated? It's all possible. It's unlikely. I don't think many people are doing this.

I don't think it's a big—I haven't heard any musings in the tax world. I doubt that Congress will ever be functional enough to make any substantial changes to this. So I think that I don't see any downside to it. OK. I actually was not aware that I could potentially save a $4,000 receipt from today and withdraw that 20 years from now.

So that makes it an obvious answer. So you were just thinking about it in the context of, "I'll take the money out as a retirement benefit." Right. OK. So no, it's even better for you because, remember, you don't have to—so let me clarify this because this is important. Let's pretend that that benefit did not exist.

It wouldn't matter whether you saved the receipt or had the expenses at all. You could never incur that $4,000 cost. And then as long as you are age 65 or older when you take the distribution from the HSA, you can take it out and spend it on anything. And you will be taxed at your marginal tax rate at the time of distribution, but you won't incur the penalty tax that you would have before 65.

So you could take it out for either of those—you could take it out when you wanted to. However, if you wanted to get the maximum benefit from the tax-free growth of the account, then essentially what you could do is save that $4,000 receipt. And then 30 years from now, then you go back and you say, "Here's my $4,000 receipt," and now you go ahead and take that $4,000 out with no income taxes because it's being used to pay for medical expenses.

So it does work, but you're going to have to be scrupulous with your record-keeping. Makes sense. That's fantastic. Thank you so much. My pleasure. Any other questions today? No, sir. All right. Thanks for calling in, Ruha. We go next to David in California. David, welcome to Radical Personal Finance.

How can I serve you today? Hi, Joshua. Thanks for taking my call. My pleasure. I had trained for 10 years to become a church planning missionary overseas, and due to an unexpected medical needs of one of my children, we had to return to the States, and that was about a few years ago.

And just ever since coming back, I've been struggling trying to find a new direction, a new career path that I could just pursue. So I was wondering what kind of advice you could give for finding a new direction after an unexpected life change. A friend of mine had said that you had mentioned in a previous episode about a personality test that matches you with potential careers.

So I was wondering if you remembered what that was. I'll give you a couple of options for that. First, though, how is your current financial situation? I would say it's stable. I have a job. I work in public education as an administrator in the business office, and we have a $10,000 emergency fund.

We're able to max out our IRAs every year. So financially, you came back from overseas, and now you're on a stable financial footing. You're currently employed; is that right? Yes. Okay. So you're currently employed. So here would be my question. Do you—and let's start first with the choices that you were making previously—do you still intend to be involved with the work of actively planting a church or churches?

We have felt like if the Lord were to direct us clearly back overseas, then we would be open to that. But for now, we feel like He's brought us—He has us where we are, pretty obviously. And we are involved with our church and ministry in other ways, but not in full-time vocational ministry.

And so previously, when you were overseas, you had solicited financial support, and you were using that financial support from others to pay your expenses, and now—and so the bifurcation that you're making here is that now you're not interested in pursuing that path? Not that I'm—we're not interested in it, but just that—I don't know.

I don't know what direction we're going in now. Okay. So, the reason I'm asking about this is church planting and evangelization is deeply important to me. Extremely important. I'm—I have a deep interest in the subject, and I'm deeply interested in understanding how it can be progressed. So, I've studied this topic quite a bit.

I'm seeking to be as involved myself in any possible outlet that I see for that work of planting and strengthening churches. However, I don't, first and foremost, make that a financial consideration. And I think that that's a bifurcation that can be a little bit questionable. As far as I can tell, in my understanding of Scripture, in my understanding of God's plan for how the Church grows, each and every disciple of Jesus must be involved in making other disciples.

And that's just a simple—a different way of approaching the topic of church planting. Now, some people pursue the path of church planting in a very expensive way. I've been to a couple of church planting conferences, I've interacted with a number of pastors and books that are focused on this.

And in the United States, there is often a very, very heavy cost that's associated with the work of church planting, especially the way that it is frequently done in the U.S. American context. Frequently, the cost is in excess of six figures, not even including the support for the individual person if they're pursuing it on a full-time basis.

But I think my opinion—and this would be fighting words in certain circles with certain people—I think a lot of that is unnecessary. And I think that there are ways to approach that work that don't involve saying, "Well, I have to make money. I have to figure out how to start a church so I can get rich." All around the world, there are a lot of people who pursue that.

And I think that we're well-served by disconnecting our financial needs from our work in the local church. I don't deny that churches should support those people who are working in them. The Bible is crystal clear that a worker is worthy of his wages, and so a person who's involved in working deserves financial support.

However, I think that's a very dangerous place to be, because if you're ever dependent on the local church or local churches for your financial support, that can quickly lead to your having a temptation to make decisions with that in mind. I don't accuse all people of doing that, but it's a big temptation.

And there are a whole lot of pastors and preachers who know that they should be preaching faithfully the conviction that they have, the clear biblical doctrine that they believe, but in so doing, they know that they would lose their financial support from the local church, and thus they keep their mouths quiet.

The best way I know to protect against that is to never put yourself in a position where you're financially dependent upon the local church. That allows you the freedom to speak clearly without having their financial interests mixed up. Now, why is this so important? Because if you're going to be involved in the work of actively discipling others, actively encouraging the growth of your local church, actively involved in that, then you have to structure your life and your business in ways that are going to take that into account.

And here's where you have to take a careful inventory of what your burden is that you feel before God with your actual work. If you feel that God wants you to be primarily involved, you feel a deep conviction or impression that you are to be primarily involved with the work in your local church, and if you have an idea of what that context that looks like, you may make career decisions that don't fall into the traditional, normal, current-day U.S.

American self-fulfillment approach. For example, you might put yourself in a situation where your work is something that's done early in the morning. Years ago, I worked with a man who, for years, his means of support, he was engaged in what most people would call full-time missions, but for years his form of support was to deliver newspapers, back when that was a slightly more lucrative and normal occupation with a higher demand.

But that allowed him to get up and go to work at 3 o'clock in the morning, and then he would be done and have his day free for interaction with others. And so you might make a choice like that. You might choose to engage in an occupation that doesn't give you a great degree of, perhaps, self-fulfillment, because it frees you up for something else.

And that's a reference point that's frequently not going to be included in any of the personality tests or things that I'm about to give you. Likewise, you may pursue some entrepreneurial endeavor, and you may make an intentional choice that it's not going to be so financially productive. You might do something that allows you to work, but you know that if you worked more hours at that occupation, you could make a lot more money, but you choose to invest those hours elsewhere because of the burden and calling that you feel.

If you do that, then that's not going to fit well into the personality profiles. So I'll give you a couple of ideas of personality profiles in just a minute, but I would encourage you to think seriously about that and to try to understand what burden you and your wife currently feel, what you currently sense is God's direction for your life at this point in time.

I don't think it necessarily has to be one or the other. I think that--and here's where, if we go any farther with this topic, we would venture off of the world of personal finance. I guess I would just say that I think that the way that--without knowing what background you're involved in, I think that the way that many church organizations approach the process of church planting is simply unsustainable.

It's unsustainable because it places too much pressure on one individual man to carry a load that God never designed for one individual man to carry. And I think especially when you involve finances in it, it leads to a great heavy, heavy burden on one man. And I'll leave you with one quote and an allusion to somebody who actually has some credentials in the world of church planting.

I have been--I've been trying to--I've studied a number of different church planting movements around the world. One of the ones that has most interested me has been the work of David Watson. Without--are you familiar with that name, David? No, no. Okay, so David Watson, very concisely with his story, he was a--he was an international missionary who was sent out originally by the Southern Baptist denomination, I think, and he had been a very successful missionary in Asia until he was sent to India, to I believe Southern India.

And while he was in Southern India, he faced total disaster. He--it was a very cold climate for the advance of the Christian gospel. He was, I think, four, three, four, five, a number of his entire--all of his mission--his ministry team that he was working with at that time and his work there in Southern India were killed by the local people.

He was--he and his wife and his family were ejected from the country by the Indian government and he, in that context, he went back to Hong Kong as a failed missionary now with his entire ministry team killed and him as a failed missionary without anything to show. And it really put him through the wringer, and this was 20, 30 years ago, I think.

This really put him through the wringer personally and he tried to figure out what on earth is going on. So, he wrestled with the Lord for months, seeking to get out of the call that he felt he had on his life, and then he never received any kind of permission or release from that context.

So, he said, "Well, if we're going to do this, we've got to do this differently." And so, he went through the scriptures with a different view in mind and looking for what wisdom is there from the Bible on how to approach this work of church planting. And the reason it's important is, sometime later, a year or so later, he began again his work in southern India.

And proceeding quickly through the story, he--the first year they planted something like zero churches, and then the next year, you know, he was sending these reports back to his denominational board, you know, one church, two churches. But five years in, they reported back that they had planted a thousand churches that year.

And so, the denominational board was, of course, suspicious that he was making these numbers up. They came out for an audit of the work that he was doing and found that they had actually understated the number of churches. And so, the reason this is important is, over the last 20 years, David Watson and others--other organizations involved have planted hundreds of thousands of churches throughout the world.

And this is a world that I would assume that we're a little bit plugged into, but most U.S. Americans have no context of how fast the Christian church is growing on an international basis, because we look at the U.S. American context, where all of the mainline liberal Protestant denominations are in collapse.

But on a global basis, Christianity is growing by leaps and bounds. And you can trace--there's a--there's good academic study on what's happening as far as these what are called contagious disciple-making movements. So, he wrote a book called Contagious Disciple-Making by David Watson. I would encourage you to get it and to read it.

But one of the things that he has done, and he's an elusive figure to find, but you can find some of his teaching, and one of the things that they noted on the work that they have involved, that they did in planting hundreds of thousands of churches, they found that on a global basis, anytime the church built a building, and anytime they started paying a pastor, then the growth always stopped.

Because instead of putting the advance of the gospel first and foremost, then it develops in the pastors who were involved this idea of stability, and it stops the growth, it stops the advance. And so, they've learned over the years to never--to always discourage the building of a building, and always discourage the paying of a pastor.

And so, what's the point? The point is that when somebody is devoted to their work, and it's not for their own pecuniary interest, that it changes the whole dynamic. Now, I do not deny, and this is why I'm affirming this, we have clear biblical support to say that the Bible says Jesus taught--is it Jesus or Paul?

The Bible says that the preacher of the gospel is worthy of his wages. So, those who preach the gospel should make their living by the gospel. So, there is no denying that somebody who's diligently involved in the preaching of the gospel should be paid for that work. However, when that pay is first and foremost, it seems to totally change the dimension.

And I think I would commend to you the study of the examples that we have from the preachers of the gospel in the actual New Testament, and look to see what worked and how did they do it. Now, let's go back to practicality. The point is that that work, if you're going to be involved in one local church, depending on the expression of that, if it's a small local working, that shouldn't need 50 hours of your week.

And that's why one of the big growths within the U.S. American context is in the context of bivocational pastors. And that's really a model that I would commend to you to consider, because if you feel a burden or a call to be involved with church planting, then taking a personality profile, doing a Myers-Briggs here, is not going to change that.

And frequently what you will find is if that burden is strong on your heart, you will have to approach it and say, "What's going to support me and allow me to do this other work?" Not so much, "What's going to be the most fulfilling?" So that was a very long preamble to, let me give you some personality tests that may help you.

Any questions before I go on? No. Okay. So here are, there are four personality profiles that each have their own unique attributes. One is well known, it's the Myers-Briggs. That one is probably the most famous of the personality profiles. And in the Myers-Briggs context, I'm just going to give you the names and you can read about them.

And also what I'll do for you, David, is I actually have a whole segment on this in the career and income course that I have been teaching and been updating. I'll privately, separately get your info and I'll just enroll you in that course in case it can be helpful to you at this transition stage.

Great. But the four that are important is one is Myers-Briggs, two is Colby, three is StrengthsFinder, and four is the DISC personality profile. Now where I would start, the one of those that I think is the most practical for your career questions is the DISC profile that's sold by Dan Miller at 48days.com.

He sells this, and my understanding of the DISC profile is that it's drawn a little bit with influence on the Myers-Briggs test. But what he sells at 48days.com is a product that is explicitly focused on career choice. It's a simple test, but it gives you kind of a little bit of your personality profile and gives you some potential careers.

Of all of the ones that I have done, and actually in preparing for the course over the years, I've taken a lot of these personality profiles, and then in preparing for the course that I have been teaching, I took several more. But of all of these that I have done, the DISC is right to the point.

And I was shocked when I actually looked at all of the things that it spat out to me, and I realized that something like 70% of the specific jobs that had been encouraged for me to pursue were things that I had either pursued in the past and enjoyed or were on my list purely from me thinking about things that I would be well qualified for to pursue.

And so if you were only going to do one, do that one. I don't remember how much you charge for it. It's pretty cheap, $20, $30, but it's well worth it. Do the DISC personality profile at 48days.com. And if you'll stay on until I finish recording the show, I'll get your info and enroll you in my course for free, and hopefully that'll help you.

Anything else? Any other questions? Any clarification needed on any of that? No, I don't think so. That's great, thank you. I will hang on until the end. And do yourself a favor and read David Watson's book called Contagious Disciplemaking. And--let me just confirm that. Yeah, it's Contagious Disciplemaking. Looks like he's got a website built up.

And they've been working in the United States as well. But on a global basis, they've been doing some really good work, and it's well worth being aware of it. And I went to, a couple years ago, I went to a big church planning conference that was in Orlando. And I guess the thing that I would say is I appreciated so much of the work that many preachers are involved in.

But man, if you have to spend six figures and figure out how to get supported for multiple years to establish a local church, that is utterly unsustainable. That just can't work for the growth that's necessary. But there are a lot of people who are involved in other expressions that it just doesn't involve that big of a financial cost.

I'll link to the book in the show notes today as well. Jared in Arkansas, how can I serve you today, sir? Oh, hello, Joshua. Thanks for taking the time to answer my question. I recently began working for a company that offers a non-qualified deferred comp plan. And because I'm considered a highly compensated employee, I'm very limited in what I can contribute to the 401(k), which makes this account that much more important.

In the past, I've only had access to typical retirement accounts like 457s, 401(a)s. So this type of account is very new to me. Really, I'm interested in what your thought process would be in determining how this tool should be used, kind of an overall financial plan towards trying to gain financial independence, given that it's a fairly complex, at least to me, complex type of account and there's inherent risk associated with the funds that you invest because it's non-qualified.

Right. Tell me a little bit more about your understanding of what's available to you, the terms, the investment options, etc. Yeah, so the investment options are pretty good. They are fairly low fees, you know, typical index type funds you're able to invest in. Where it gets complex for me is that basically you have to determine each year the percent of your income and bonuses that go into the account.

But at that time, you also determine disbursement. Basically, you can have the funds disperse up to 15 years after you separate employment, which could be a year from now, could be at retirement. But you have to determine where your money is going, how much and how you want it dispersed when you separate.

But then the account is non-qualified, which to me means that basically if a company were to go bankrupt, my investment assets would be considered an asset of the company. That's right. So you are supposed to choose a percentage of your income to designate to the account. Does your employer put additional contribution in there for you or they're just simply saying, "Yes, you can defer some of your income in here"?

No, there's a small match of 2.5%. Okay. So then you're investing into mainstream mutual funds, index funds, things like that. And then how is the distribution schedule determined? So each year that I decide where my money from the next calendar year is going to go, I determine based on the separation date when the funds will be distributed.

They're done in annual equal installments based on the schedule I pick each year. So the limit is 15. So say this past year, when I elect the percent of income that's going into the account, I also determine if I could get the money in one lump sum, the January after I separate employment, or I could spread that out up to, in annual increments, up to 15 years, meaning they'll just divide my contribution and growth into annual payments that will be sent to me over that 15-year time period.

Do you remember any names that were referred to in the paperwork for this type of plan? Was it called anything other than a non-qualified deferred compensation program? No. Basically, they titled it an Executive Deferred Compensation Plan, and it's through a company called PenCal. Right. So let me answer your, well, let's talk about your situation first, and then I'll go through a little bit of what is specific to you.

First, is there any reason for you not to participate? No. I mean, I have the funds available. I'm using it as a tool to basically defer taxes. No, I can't think of any reason why I wouldn't participate. The company is very, it's about a 30, 40-year-old company. It's very stable.

I don't, it was kind of a follow-up question I was going to have, is how to determine the stability of the company and whether or not there's a risk of bankruptcy in the future. But from the information that's available to me, it's a very stable company, and I have the funds for me to contribute to the account.

Have you asked the plan representative how safe the assets are in terms of claims on the company's assets? No, I haven't asked the question. In the document, basically, it just states that it is a non-qualified account, and if the company were to go bankrupt, it is, you know, your assets are a part of the overall company assets.

They do have, I think maybe it's a rabbi trust. I was just going to ask that. Are the assets held in a rabbi trust? Yes, they are. Okay. All right. So let me give, let me answer your question and then just give a little bit of commentary for the audience to understand in case this is a new question for them.

If there's no reason for you not to participate, and the only reasons that come to mind that are the most important ones is, one, do you have the money? Do you need the money? Right? You've said, "No, I have the money. I'm able to participate in it and contribute to it." Two would be, do you have a better use for the money?

So maybe you have some brilliant investment idea that you do out of your kitchen at home. In that case, putting money into index funds, well, what does that help me? I don't need any more money in index funds. I need to do this brilliant investment opportunity that I'm working on in my kitchen.

So if you don't have a better use for the money, then there's not any reason to participate. And then the third thing comes involved with the financial stability of the company and the protection of those assets. So here's where we need to specify what is the difference between a qualified deferred compensation plan and a non-qualified deferred compensation plan.

A qualified deferred compensation, most of the retirement plans that we're used to talking about in the United States with regard to the nomenclature that we use, a 401(k), a 403(b), etc., these are all qualified plans, which means that they are tax qualified, which means that they follow the law related to ERISA, E-R-I-S-A, the Employee Retirement Income Security Act, if my acronym is correct.

And so because of a plan being qualified according to ERISA, there are certain requirements that must be met. So for example, you said that you are a highly compensated employee. Well, under ERISA, a qualified plan may not discriminate among employees and may not discriminate in favor of highly compensated employees.

So when you sit down and look at a roster of people who are involved in a company, then you have to meet certain testing limits as far as participation rates and the incomes of the people who are involved. And if you're a highly compensated employee, sometimes you may not have enough of your employees who participate in a plan in order for it to meet the non-discrimination testing rates.

Now, there are ways for a company to get around the non-discrimination testing rates. So for example, they'll establish what's called a safe harbor plan, where they make a standard contribution of additional amount of income for each employee, and that allows the highly compensated employees to participate. But sometimes this can work out well and sometimes it can't work out well, and it all has to do with the structure of the company.

Is the company the type where a qualified plan works and do the people like it? By the way, Jared, do you also have access to a qualified plan? Does your company offer one to other employees as well? Yeah, so there's a 401k. We have a typical 401k, but because I'm a highly qualified employee, I can only put in 3% to that account.

But yeah, the rest of the workforce does. And is that because you don't have a high enough participation rate from the other employees? Yeah, I don't know. I don't know that they would give me that information if I asked. Okay. It should be no problem as far as to understand, but it's immaterial for this discussion.

So a qualified plan cannot discriminate among employees. All employees have to be able to participate after their eligibility. There can be a vesting schedule, but those vesting schedules are limited, etc. So you basically can't discriminate among employees in favor of the highly qualified employees. A qualified plan must satisfy all of the ERISA requirements regarding reporting, regarding plan design, etc.

When somebody participates in a qualified plan, they do have the opportunity to take an immediate tax deduction for their contribution. So this is why you can defer money into your 401k plan and you can take your immediate tax deduction that's because it's a qualified plan. And then in a qualified plan, the earnings, the growth, the interest, those earnings on your accounts can accrue tax deferred until they are distributed from the plan.

And then when they're distributed at the plan, then of course they're usually taxed to you at an ordinary rate, such as a 401k. Now you can get these things mixed up a little bit. And here's where the common personal finance nomenclature that we use conflicts a little bit with technical personal fin-- sorry, technical financial planning nomenclature.

For example, a 401k plan is actually simply a form of deferred compensation, which allows the employee to make contributions to the account. So your employer could set up a deferred compensation program for you that didn't permit you to make contributions, but usually they do, and that's what's called a 401k plan.

But people often-- this distinction is important because people often get bent out of shape when there are some companies that don't allow you to take distributions from your 401k plan. There are some companies that don't have loan provisions available for your 401k plan. And it's important that people know that it's a matter of how the account is written and what the plan design actually is.

Now there has emerged to be a fairly standardized approach. Most 401k plans allow loan provisions. Some 401k plans allow in-service distributions. And so there has developed a fairly standardized approach, but that's because the benefits industry has tried to seek what has been the most helpful for people. Now, back to the point, a couple more comments, and then we'll-- I'll try to finish with your specific question.

Now, a non-qualified plan doesn't meet those requirements. And it's called non-qualified because it doesn't match the ERISA law, but it still can have certain benefits. So for example, a non-qualified deferred compensation plan can discriminate among employees. You don't have to offer everyone access to the same plan. You can choose to offer plans to all of your key employees or to your highly compensated employees or to your management employees.

An employer could offer an individual plan to one person. They can discriminate in favor of any person that they want to discriminate with. So your employer could come to you and say, "You are our key salesman. You produce millions of dollars of revenue for you. Here's what I want to offer you.

I want to offer you a unique plan. I'll give you extra compensation if you follow these certain rules. You stay with us for a certain amount of time. You engage in these certain activities." It can be written with a wide degree of flexibility. It's exempt from all of those ERISA requirements, and so it allows the employee and the employer to come to an agreement that is mutually beneficial.

And so this would be where if you were the CEO of a large publicly traded company, you would have your salary, but your ability to contribute to a 401(k) plan is meaningless, but you would go ahead and have a unique retirement plan negotiated in your contract that pays you out a million dollars a year under certain language.

Now, you give up a good bit of the benefits that you have with a qualified plan to buy a non-qualified plan. So for example, in a non-qualified plan, you aren't allowed to take a tax deduction for any contributions on the account until it's actually available. Or those fund earnings, and this is where the big danger comes in, those earnings, the account has to be available to as an asset of the company.

If your company, if you're participating in a qualified plan and you've got a million dollars in your 401(k), your company goes into bankruptcy, that million dollars in your 401(k) is not available to the creditors of the company. That million dollars in your 401(k) will be safe. It will not be affected by the bankruptcy of the company.

However, if your company has a million dollars in a non-qualified contribution plan, then you may have a problem because that amount of money has to be kept as an asset of the company. Now, the term that you mention of a "rabbi trust" is important, and it's called a rabbi trust because one of the early, the ruling that allowed for this doctrine, I think it was a special plan that had been set up between a Jewish rabbi and the congregation that was employing him.

And so in the rabbi trust, it allows for a slight separation of assets from the assets of the company. Now, the asset in a rabbi trust, it has to be available to the general creditors of the company if that company files for bankruptcy or otherwise becomes insolvent for some reason.

And so it's not fully protected. You can't have greater rights in the asset than the unsecured creditors of the company. It has to have clear rules describing when the benefits will be paid, and the company has to notify the trustee of any bankruptcy or financial hardship that the company is undergoing so that you would know that if a bankruptcy or financial hardship is occurring, then the trustee can start to make factors for you.

But it doesn't provide protection against the bankruptcy of the company. And so that's where, I'm getting so deep here. Let me just wrap it up with this. There's no reason not to participate. If the company is on a good setting, there's no reason not to participate. They've got this incentivized for you to incentivize you to stay with them for a longer period of time.

But you do need to ask questions and read what the actual plan is and make sure that you understand it. And take these questions back to HR. And the biggest advice I would give you, if this is your first time participating in a non-qualified deferred compensation program, read the terms carefully, understand it, and ask these questions to your HR representative.

I can't know what's in there because they can be customized. You can build a non-qualified deferred compensation program that's just for one individual. And so it's not as easy for someone like me to answer about it. But what you want to ask is, what are the terms under which I would lose the account?

What are the terms under which my money is available for the claims of the creditors? What's the financial position of the company? And what are the tax implications for me? And if you just ask those questions and make sure that you understand, then you can decide for yourself if it will be helpful to you.

We got really deep there, but is that enough to at least give you a good start, Jared? Oh, absolutely. That list of questions is incredibly helpful. Thank you. Absolutely. It's a good move. I don't see any reason not to participate in a non-qualified plan. Non-qualified plans, you want to just make sure you understand what it's funded with so that you can work that into your overall plan.

It sounds like your plan is funded with stocks, with mutual funds. That's good. Frequently, these plans are funded with life insurance policies. That can be helpful. There's a whole other wrinkle with that. The reason they're frequently funded with life insurance policies is because the inside buildup of cash value in life insurance policies are exempt from that annual tax growth.

And it also provides some stability and security for the pension payments if you have a defined benefit program that's structured with life insurance. There are a few life insurance companies and life insurance advisors who exclusively focus on selling life insurance policies with this particular structure. It doesn't sound like you have that here.

Just ask questions and understand it. And basically, what you want to be aware of is what could go wrong that could harm me. And the most important thing is that you know that just because the assets are there in your account, you don't actually have the money until it's paid out to you.

It's still an asset of the company that can be invaded if the company faces financial insolvency or bankruptcy. So understand that and then take advantage of what you got. Thank you all so much for listening to today's show. If you would like to join me on a future Q&A show, I'd love for you to do that.

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