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I'll go out on a limb here and give a flat NO. And I'll be willing to bet that a DOL auditor wouldn't allow the 12% rate either. But, I also predicted that the Patriots would beat Denver in the AFC Championship game, so my predictions aren't worth much...

It's hard to know if you are seriously interested or fishing around for...whatever, but this (TPA) business is highly specialized. I could see someone having a good relationship with a TPA firm or even an employee of a TPA firm and wanting to take that to another level, but randomly saying "I want to be a TPA" is a little odd. I feel like we're missing something.

As a HCE option there is The STAR Plan (Strategic Talent Appreciation and Recognition) - an individual after-tax institiutional life insurance (ILI) funded investment and risk management program - same ILI products large employers invest through for NQDC (COLI) but made available for personal ownership. By 2002 the ILI products funding NQDC had financially evolved into a higher HCE value than a NQDC plan. So in 2002 we moved the ILI plan sponsor role from the employer to our ILI TPA firm - why STAR is available to all HCE's. Employer is merely assisting in HCE awareness of their qualification to join our program and validating role and compensation for ILI underwriting qualification. Hence, a pat-on-the-back and baton pass. No employer costs, liabilities, regulatory or HR issues. The HCE chooses the issuer, contribution capacity, asset allocation, etc, etc. And if the employer wants to make contributions (match, incentive, etc) they can via Bonus 162 with an optional REBA (Restricted Employee Bonus Arrangement) to provide a vesting schedule on the bonus. STAR serves as (1) a savings complement to the tax-qualified plan / alternative to taxable fund investing and (2) for those in a NQDC plan a distribution management container for life-after-career.

1. Consult with a lawyer knowledgeable about securities registration requirements/exemptions for NQ elective deferral plans. 2. Opening it up to all HCEs may cause the plan to fall out of the "top hat" exemption.

Atila, some employers use a set of plans' designs and elections that run in the opposite direction: Before the beginning of a year, a participant irrevocably elects deferrals under an unfunded nonqualified deferred compensation plan. That plan provides that the amount that is the lesser of the year's deferrals or the amount that could be allocable to the participant's account under the 401(k) plan is distributed to the participant by March 15 of the year after the year for which the deferral was made unless the participant had irrevocably elected (before the beginning of the year for which the participant earned the compensation) to treat that amount as deferrals under the 401(k) plan. Parallel provisions govern the matching contributions. IRS Letter Rulings 95-30-038, 97-52-017, 97-52-018, 1999-24-067, 2000-12-083, 2001-16-046. An employer considering such a design should consider that not everyone who is a highly-compensated employee for the 401(k) plan necessarily can be a select-group employee for an unfunded plan. A participant considering the elections described above should carefully evaluate the risks of the employer's unsecured promises and creditors' access to amounts not held under the 401(k) plan. Also, this requires picture-perfect drafting of the documents and elections.

Is the plan ERISA-governed? If so, did the plan's investment in the partnership result in, for any of the preceding plan accounting years, the plan's qualifying plan assets having been less than 95% of the plan assets? If so, did the plan fiduciaries have ERISA fidelity-bond insurance with coverage no less than the value of the non-qualifying plan assets. If neither set of conditions for a waiver of an independent qualified public accountant's examination was met, did the plan's administrator engage an IQPA? If an IQPA was engaged, what did the IQPA's report say about the valuation of the plan's partnership interests? If an IQPA was engaged, what did the IQPA's report say about related-party transactions and prohibited transactions? Is the plan's partnership interest allocated only to the accounts of one or two directing participants, or is it allocated to all participants' accounts?