Agreements Under ERISA?

[four01kman]

A senior management employee and his (her) employer entered into an agreement regarding retirement benefits. The provision covering retirement benefits was part of the overall agreement.

Would the retirement benefits portion of the agreement generally be covered under ERISA?

[jpod]

It could be. Case law isn't perfectly clear, but generally not worth worrying about; assume it is and file top-hat statement.

[Ron Snyder]

Yes, as ERISA covers employee benefit plans provided to employees by employers. However, it may fall under the "Top Hat" exception so far as ERISA compliance is concerned. Familiarize yourself with those rules and you can make that determination, or employ suitable counsel to answer that question (rather than relying on strangers on a bulletin board). Top Hat plans are still ERISA plans, but are exempted from much (but not all) of the reporting and disclosure requirements.

Whether the retirement benefits provisions are a retirement plan for ERISA purposes turns on what exactly they agreed upon. The contract could read "we will provide you with a retirement benefit", but the question won't be answered until the actual retirement plan document is provided. The contract may read that we will provide you with a benefit or contribution of x$ (or x% of pay), and it could either be a qualified or a nonqualified plan, depending upon the details. In any event, the plan MUST be prepared in compliance with the appropriate section of the IRC (ie, 401(a) or 409A), the funding must be done correctly or there will be immediate tax consequences to the employer or to the employee (or both).

Assuming it is a Top Hat plan gets you nowhere except in trouble. Determine which type of plan it is and comply with those rules.

[jpod]

To the extent that vebaguru's comments were directed at my earlier comment, note that the crux of the matter is whether or not there is a "plan." That this is not such an easy issue is evidenced by the Supreme Court's analysis in the Fort Halifax case as well as a couple of Circuit Court opinions, the one I remember off the cuff being the 11th Circuit's decision in the Williams case from 10-15 years ago.