Select Group of Management

[John Feldt ERPA CPC QPA]

An advisor has a prospect with about 300 EEs, and this employer wants a NQDC plan to cover only about 20 non-highly compensated employees who are managers. This is to have a long vesting schedule as an incentive to retain them. No HCEs and no executives would be in this plan.

I don't see how this could be considered a top hat plan. What am I missing?

[Peter Gulia]

Is the employer a church?

[jpod]

Is it a "pension plan" within the meaning of 3(2) of ERISA? If not, the point is moot.

[John Feldt ERPA CPC QPA]

Not a church. Yes, ERISA 3(2).

The intent is to be a program maintained by the Employer that provides retirement income to employees, and/or to defer income for such employees for periods up to (or past) the termination of employment.

[jpod]

Ok. I agree that this is not likely to be a top-hat plan. Perhaps it can be taken out of 3(2) by providing for payment at the end of the vesting schedule. I realize that would take much of the tax deferral out of the equation, but if this is all employer money with a long vesting schedule, it doesn't sound like tax deferral is a goal here.

[Mark Whitelaw]

You can do a vested Bonus 162 plan funded with institutionally-priced life insurance - employer or co-contributory design. Only requirements would be the individuals are healthy, perform "white-collar" or "gray-collar" roles and earn over $50,000. We've been sponsoring / administering these types of plans since 2002 as an alternative to NQDC / 409A for firms where the Unsecured Creditor nature of NQ plans is not a fit, or the participants would not qualify for Top Hat.