E-filing Top Hat Plans – Not So Fast!

Tom Breitenbach

Acknowledging our entrance into the 21st Century, the DOL recently announced proposed rules that would mandate electronic filing of the required statements to notify the DOL of the establishment of a new “top hat” plan. Under the current procedures put in place 40 years ago, the DOL estimates that it receives about 2,000 paper notices annually for newly established top hat plans. Can you imagine the clutter in some warehouse?  It must be an insurmountable task for the DOL to organize and catalog these filings so it can track who has a nonqualified plan designed to benefit only “a select group of management or highly compensated employees.” 

The regulation is effective immediately, on a voluntary basis, but will be mandatory 120 days after the final rule is published. I could give you the link to the web-based electronic form, but I won’t. I usually preach cooperation to our clients when dealing with the DOL, but in this case, why would you want to electronically file sooner than you are required, only to make it easier for the DOL to queue your plan in its system? It will become much easier for the DOL to perform random audits of these plans, or to investigate any employer targeted as having too many plans rewarding its key employees without similar benefits for the rank-and-file. 

Proponents of the new system applaud the fact that e-filing will provide instantaneous  electronic confirmations of receipt that a filing was received by the DOL. However, my current practice of sending by certified mail with return receipt, serves the same purpose of proving a filing was made. For now, there is no need to make it easier for the DOL to send you an invitation to an investigation, but that time will come soon enough.