Top Hat Plan


DEFINITION of 'Top Hat Plan'

A form of retirement plan available only to selected company employees - usually key executives. Such plans are different from standard retirement plans in a number of ways:

1) They don't usually offer the same tax benefits of an opt-in plan.
2) Not everybody can participate - even those of equal company stature may have different plans.

Generally, there are two types of top hat plans: a nonqualified deferred compensation plan and a supplemental executive retirement plan. The former allows participants to defer income into the plan during each calendar year, while the latter is funded entirely by the employer.


Unlike opt-in retirement plans, a top hat plan is often exempt from many government regulations. Hence, the interest rate associated with the plan is usually higher than that offered by traditional retirement plan.

  1. Tax-Deferred Savings Plan

    A savings plan or account that is registered with the government ...
  2. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  3. Pension Plan Administrator

    An individual responsible for managing the day-to-day affairs ...
  4. Plan Participant

    A plan participant either contributes into a pension plan or ...
  5. Supplemental Executive Retirement ...

    A non-qualified retirement plan for key company employees, such ...
  6. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
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