Tenth Circuit holds that severance agreement is top-hat plan

Article Abstract:

The US Court of Appeals for the 10th Circuit ruled in Duggan v. Hobbs that an unfunded severance plan established for one employee of Chemworld was a top-hat plan, meaning that the employee could not sue for breach of ERISA fiduciary duties. Top-hat plans not covered by ERISA are unfunded deferred compensation arrangements offered to a select group of managers or highly compensated employees. The plaintiff was the highest paid non-owner, and the fact that he was the only employee offered the plan indicated that he was able to influence plan provisions.

Retirement Benefits, Severance pay

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SEC refuses to issue no action letters on filing requirements for some large employer deferred compensation plans

Article Abstract:

The Securities and Exchange Commission (SEC) has decided not to issue no action letters requested by Merrill Lynch and Raytheon regarding deferred compensation plans offered by the two companies. Arguably, unfunded nonqualified deferred compensation plans could be subject to securities registration laws, but the SEC has typically issued no action letters. This change in policy is the result of an increase in the use of deferred compensation plans. Salary reduction plans in particular may be subject to plan registration.

Interpretation and construction, Securities law

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IRS approves 401(k) "wrap-around" plan

Article Abstract:

The IRS approval of 401(k) "wrap-around" plans will allow highly compensated executive employees to make blanket deferrals and free employers to place such employees in these nonqualified wrap-around plan structures. The ruling should aid in the administration of such plans and eliminate "second election" problems. Usage of the qualified 401(k) is maximized, and the excess goes to a nonqualified deferred compensation plan.

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