August 28, 2020
Top Hat Plans: What Executives and Organizations Need to Know… and Why
This past January, the U.S. Government Accountability Office (GAO) published its initial findings after conducting a review of executive retirement plans, specifically, top hat plans. The study came in response to a request filed by U.S. Senators Ron Wyden (Oregon), Bernie Sanders (Vermont), and Patty Murray (Washington).
This article looks at 1.) the GAO’s report; 2.) the final rulings by the U.S. District Court in the class action lawsuit of Berry v Wells Fargo & Co; and, 3.) the implications of both on Top Hat plans in general.
April 06, 2020
Non-Governmental 457(b) Deferred Compensation Plans and the COVID-19 Economy
Internal Revenue Code Section 457 provides tax-advantaged treatment for certain nonqualified deferred compensation plans. Included are both 457 plans and 457(b) plans. The focus of this update is the non-governmental 457(b) Top Hat plan.
September 16, 2019
Required Electronic Filing of Top-Hat Submissions
Fulcrum Partners is sharing this reminder from the team at IslerDare PC regarding the electronic filing of top-hat submissions. The August 2019 issue of Employees Benefits Update includes the following information: “Top-hat plans, which are unfunded plans that allow a select group of highly-compensated employees to defer compensation, must file a letter with the Department of Labor within 120 days of their original effective date in order to be exempt from the Form 5500 annual reporting requirements. As of June 17, 2019, top-hat plan statements must be filed electronically through the Department of Labor’s Employee Benefit Security Administration website (available at dol.gov/agencies/ebsa). Statements sent by mail or personal delivery will no longer be accepted.”
January 03, 2019
#ICYMI Understanding Top Hat Plans
Don’t Put Away Your New Year’s Eve Top Hat Just Yet! Over the past five-plus years of publishing Deferred Compensation News, (previously known as Fulcrum Partners News), no topic has ever attracted as many views or as much traffic as that of “Top Hat Plans.” In November 2018, the AALU Washington Report addressed some of the challenges and lack of clear guidance in identifying a company’s “top hat” group. Fulcrum Partners shared that information with its readers in a PDF suitable to download, print or read online. Because Top Hat Plans continue to raise discussion and cause confusion, we encourage you to download the report and then follow up with any member of the team at Fulcrum Partners should you have questions. As court cases have demonstrated, making sure you identify your top hat plans and appropriately limit eligibility in those plans can be important for avoiding significant litigation risk or ERISA (The Employee Retirement Income Security Act of 1974) fines. These three historic documents may also provide helpful insights: DOL Reiterates Its Stance on Top Hat Plans Electronic DOL Filing for Top Hat Plans to Be Mandatory “Top-Hat Plan” Exemption Compliance for Deferred Compensation Arrangements Securities offered through Valmark Securities,
November 08, 2018
Understanding Top Hat Plans
Executive benefits consulting firm, Fulcrum Partners LLC, is pleased to distribute this AALU Washington Report to its clients and friends. You can read the full report here or download it as a PDF: Top Hat Plans. This continuing series of articles is intended to provide deep insight into trends, events, and issues that impact the design and operation of nonqualified executive benefit plans. Top Hat Plans What Are They and How Do You Know If You Have One MARKET TREND: Recent case law continues to highlight the challenges, and lack of clear guidance, in identifying a company’s “top hat” group, but some common practices can be considered. As the court cases demonstrate, making sure you identify your top hat plans and appropriately limit eligibility in those plans can be important to avoiding significant litigation risk or ERISA (The Employee Retirement Income Security Act of 1974 ) fines. SYNOPSIS: Nonqualified deferred compensation plans (NQDC), such as 401(k) restoration plans, other elective deferral plans, and supplemental retirement plans (SERPs), must limit their eligibility to a “top hat” group to avoid significant problems under ERISA and the Internal Revenue Code (IRC). ERISA defines this group as a “select group of management or highly
July 07, 2015
DOL Reiterates Its Stance on Top Hat Plans
DOL Reiterates Its Stance on Top Hat Plans In an article written by Rebecca Moore (published in PlanSponsor), Moore provides insights on Department of Labor positions and two lawsuits in which former employees of Marriott International argued that the deferred stock bonus awards (Retirement Awards) program in which they participated was not a top hat plan and was subject to ERISA vesting requirements. The plan, which at one time covered more than 2500 employees was amended after the Department of Labor’s 1990 advisory opinion letter and then covered only an approximate 100 employees. Moore explained, “According to the DOL, allowing an employer to intentionally draft or operate a top hat plan to include ordinary employees who are neither management nor highly compensated directly undermines ERISA’s protections for employees who are not in a position to negotiate for a separate pension plan and who are thus the primary targets of the entire ERISA statutory scheme.” In Advisory Opinion 90-14A, the DOL said, “It is the view of the Department that in providing relief for ‘top hat’ plans from the broad remedial provisions of ERISA, Congress recognized that certain individuals, by virtue of their position or compensation level, have the ability to affect or