Which of the following is true about qualified retirement plans?

Qualified retirement plans are designed to provide individuals with incentives for saving for retirement, with certain benefits and requirements stipulated by federal regulations.

The aspect of early withdrawal penalties is a significant feature of these plans. If participants withdraw funds from their qualified retirement plans before reaching the age of 59½, they typically face a 10% early withdrawal penalty on the amount distributed, in addition to any income tax owed on the distribution. This measure encourages individuals to save for their retirement and only access the funds when they are at or near retirement age.

The other statements do not accurately reflect the characteristics of qualified retirement plans. They are not generally taxable upon contribution; rather, contributions to these plans are often made pre-tax or with after-tax considerations, affecting how and when taxes are applied. Annual tax filings are indeed required, but not for plans with no activity; certain exceptions apply. Lastly, qualified retirement plans are subject to federal regulations, particularly governing their funding, distributions, and tax advantages.