What is the Top hat plan?

Top Hat plans are a form of pension plans that are not offered to general employees of corporations. Instead, this unskilled pension plan is only offered to a limited group and is usually reserved for key managers and occasionally to select several other employees, depending on the plan structure.

This type of pension plant differs from standard in several ways. First, it enjoys tax -qualified status that national income agencies regularly apply to retirement plans offered to all employees of the company. Second, the ability to participate in the plan is not necessarily automatic for all people who have a similar level of liability in society. For example, being a powerful manager may not be enough to get an invitation to participate. Depending on the limit of the plan, there may be other provisions, such as the executive in the operating structure of Aplat, which currently ordered an employee.

they exist today inThe essence of two types of Top Hat configurations. The first is known as an unskilled deferred compensatory plan that will allow participants to postpone any amount of income in the plan during each calendar year. There is necessarily no corresponding employer's contribution.

The second common type works a little differently. The employer, known as an additional executive pension plan, provides financing the annual contributions to the plan. Usually there are limits based on factors such as an annual salary that determines the exact amount of financing.

Unlike pension plans offered to employees, top hat often does not have to follow so many government regulations. This means that the interest rate associated with a plan may be higher than with a traditional pension plan of 401,000. The leadership may not have to endure the period of submission before being considered complete participantsAnace that affects the value of participation if the executive decides to leave the company's employment.

It is possible to associate the actual costs of this plan with the costs associated with any other general pension plans offered by the company, so the amount of assets that flow into it may not be easily identified by shareholders. In fact, shareholders may not even realize that this pension plan is even available.