In 1989’s film Back to the Future II, Marty McFly rides a hoverboard (flying skateboard) to escape Griff Tannen and his gang of teenage thugs in the year 2015.  Well it’s 2019, and we still don’t have hoverboards to ride, however, thanks to the Department of Labor we now have mandatory electronic top hats.

On June 17, 2019, the Department of Labor announced that effective August 16, 2019 final regulations require that all “top hat” notices be filed with the Department electronically through its website.  Top hat statements are what a nonqualified deferred compensation plan for a select group of management or highly compensated employees (i.e., the top hat group) must file in order to be exempt from ERISA’s reporting and disclosure rules.  Top hat plans escape ERISA’s participation, vesting, funding, and fiduciary rules by statute.  However, the Department requires the top hat statement setting forth the name, address, and EIN of the employer; number of participants in each plan and number of plans.  The statement is supposed to be filed within 120 days of the beginning of the plan.  Once filed, the top hat plan need not file a Form 5500 or meet other reporting and disclosure rules.

In 2014, the Department established the ability to file top hat statements electronically on its website.  Filing electronically was completely voluntary (so, technically, we had electronic top hats before the hoverboard). Now, the Department is making it mandatory, beginning next month.  This is an important development for employers instituting any kind of deferred compensation plan for a select group that may be considered a retirement plan under ERISA.

It should be noted that the final regulation also applies to apprenticeship and training welfare benefit plans to be exempt from reporting and disclosure.