Recent Settlement Highlights Risks Associated with Top Hat Plans


The WRMarketplace is created exclusively for AALU/GAMA members by experts at Troutman Pepper Hamilton Sanders LLP and the AALU/GAMA staff. WR Marketplace #20-16 was written by Jim Earle and Christopher Stock. The AALU/GAMA WR Newswire and WR Marketplace are published by AALU/GAMA as part of the Essential Wisdom Series, the trusted source of actionable technical…

“Top Hat” Plans — What are They and How Do You Know If You Have One


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 compensated employees.” Department…

IRS Issues New 162(m) Rules Related to Grandfathered Benefits under Deferred Compensation Plans.

Topics: 162(m), COLI/BOLI, Congress, NQDC, Tax reform

Changes to 162(m) made by the Tax Act expand the $1 million deduction limit for covered employees at public companies. NQDC amounts accrued as of November 2, 2017 can escape these expanded deduction limits if the NQDC amounts meet certain grandfather requirements to remain covered by the pre-Tax Act 162(m) rules (“old 162(m)”). The Notice…