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“Top Hat Retirement Plan ‘Traps for the Unwary’”

"While 'top hat' retirement plans for executives are not subject to many ERISA requirements, there are still opportunities for plan sponsors to get in trouble with them."

April 29, 2015

The University of South Carolina’s Darla Moore School of Business recently hosted the 44th Annual Retirement & Benefits Management Seminar. Following the Columbia event, PLANSPONSOR shared insight about “traps for the unwary.”

An excerpt:

Susan G. Odom, Esq., member at Nexsen Pruet LLC, noted that sometimes nonqualified plans run in tandem with qualified plans and there are rules for how they interact. Plan sponsors need to know how their qualified plan defines compensation and whether payments to nonqualified plans are included in the definition.

In addition, according to Odom, some sponsors may want to encourage executives to not defer into their qualified plan in order to pass nondiscrimination testing by contributing a certain percentage into the nonqualified plan if they do not. She warned seminar attendees that this is in violation of ERISA’s contingent benefit rule.


Sue Odom is a tax attorney who has worked extensively with employer-sponsored retirement and welfare benefit plans, including pension, profit sharing, 401(k), 403(b), and 457(b) plans, ESOPs, and health, accident, disability, Section 125, flexible spending, and other welfare plans. Her law practice is focused on matters involving ERISA, employee benefits, and executive compensation.