When a nonqualified deferred compensation plan qualifies as a
"top-hat" plan under the regulations of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), the benefits of that particular classification
to an employer are that the plan is exempt from various reporting,
disclosure and funding rules. These exemptions can
significantly ease an employer's administration and maintenance
of a nonqualified deferred compensation plan. Because of this
simplicity, employers are more willing to offer these types of
nonqualified deferred compensation arrangements and thereby offer
an additional tax deferral opportunity to the select group of
employees participating in the plan. However, not
appropriately qualifying for the top-hat exemption means that a
non-qualified deferred compensation plan can be recharacterized as
a tax-qualified plan and therefore, unintentionally being required
to legally expand eligibility for the deferred compensation plan to
a
