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Donning the Plan, Forgetting the Top Hat: A Common Oversight in ERISA Compliance

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When drafting a deferred compensation plan or agreement for a key employee (a “top hat plan”), the focus is almost always on the terms of the plan. In the process, many employers miss a crucial step—filing the top hat statement under ERISA.

A top hat plan is an unfunded, employer sponsored plan that provides deferred compensation to a select group of management or highly compensated employees. Employers who sponsor these plans must file a top hat statement with the Department of Labor (“DOL”) within 120 days of the plan’s effective date. By doing so, the employer ensures that the plan is exempt from a number of ERISA’s reporting and disclosure requirements.

Filing a Top Hat Statement

Filing a top hat statement is a simple process. It is an electronic filing that includes the following information:

  • Employer identification information (EIN, name, address);
  • Plan administrator information;
  • Number of top-hat plans maintained;
  • Number of participants in each plan; and
  • A declaration that the sponsor maintains the plan(s) primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

There is no user fee for a timely filed top hat statement.

Correcting a Missed Filing

If an employer realizes that it has not filed a Top Hat Statement when required, it may correct this failure using the DOL’s Delinquent Filer Voluntary Compliance Program (“DFVC Program”). This is the same program that employers use to correct missing or late Forms 5500. To correct, the employer must submit the late filing and a $750 user fee through the DFVC Program. The $750 user fee applies regardless of the number of plans or the degree of lateness.

Employers who are unsure if they have made the required top hat statement filing may use the DOL’s search tool to locate top hat filings at: