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.