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

Mardy Gould • April 9, 2024

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: https://www.askebsa.dol.gov/tophatplansearch.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
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