What is a top hat plan under ERISA?

A top hat plan is a nonqualified deferred compensation plan that is designed to defer taxation and avoid key provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Is a top hat plans subject to ERISA?

Top hat plans are exempt from certain requirements of the Employee Retirement Income Security Act (ERISA) such as the participation, vesting, and fiduciary responsibility provisions. However, top hat plans are subject to ERISA’s administration and enforcement provisions as well as some of the disclosure requirements.

What is a top hat plan?

A top hat plan is a type of employer-sponsored plan that is unfunded. The design of the plan is to provide deferred compensation to the eligible employee group. However, participants in a top hat plan are typically high-ranking executives and directors.

Do top hat plans File 5500?

While a sponsor of a top hat plan does not have to file an annual Form 5500 series report for the plan, it must submit a statement to the DOL within 120 days of the plan’s effective date. Failure to do so could result in more burdensome reporting requirements and penalties.

Is a SERP a qualified plan?

A supplemental executive retirement plan (SERP) is a set of benefits that may be made available to top-level employees in addition to those covered in the company’s standard retirement savings plan. A SERP is a form of a deferred-compensation plan. It is not a qualified plan.

What are top hat benefits?

A plan that is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation or welfare benefits for a select group of management or highly compensated employees.

Are top hat plans subject to 409A?

In addition, since retirement plans with top hat status cannot be tax-qualified plans, given the requirement that they cover only the more highly compensated of the employer’s workforce, they must qualify for an exemption from or comply with Section 409A of the Internal Revenue Code, which governs the taxation of …

What is a 457 B top hat plan?

Non-governmental 457(b) (“Top Hat”) plans must limit participation to groups of highly compensated employees or groups of executives, managers, directors or officers. The plan may not cover rank-and-file employees. Non-governmental 457 plans must remain unfunded.

What type of plan is a SERP?

A supplemental executive retirement plan (SERP) is a set of benefits that may be made available to top-level employees in addition to those covered in the company’s standard retirement savings plan. A SERP is a form of a deferred-compensation plan.

How do I fund a SERP?

Supplemental retirement income funded by a life insurance policy. Although SERPs could be paid out of cash flows or investment funds, most are funded through a cash value life insurance plan. The employer buys the insurance policy, pays the premiums, and has access to its cash value.

What is a section 457 B plan?

An eligible deferred compensation plan under IRC Section 457(b) is an agreement or arrangement (which may be an individual employment agreement) under which the payment of compensation is deferred (whether by salary reduction or by nonelective employer contribution).

Should I roll my 457 into an IRA?

Down the road, you may find benefits to moving your money into an IRA. Every plan is different, but 457(b) accounts typically don’t offer nearly as many investment options as IRAs, says Scheil. Probably the biggest reason to roll over this savings to an IRA is to consolidate multiple retirement accounts.

What is the definition of Top Hat plan?

A top hat plan is a type of employer-sponsored plan that is unfunded. The design of the plan is to provide deferred compensation to the eligible employee group. Participants in a top hat plan are typically high-ranking executives and directors.

What is top hat filing?

Top hat plans are unfunded or insured pension plans for a select group of management or highly compensated employees. The Department published a final regulation that makes it mandatory to electronically file the statement. To go directly to the statement, click on the link “Proceed to File Your Top Hat Plan Statement” below.

What is top hat?

Top hat. A top hat, high hat, cylinder hat or topper is a tall, flat-crowned hat for men traditionally associated with formal wear in Western dress codes , meaning white tie, morning dress or frock coat.