Public companies sponsoring non-qualified deferred compensation plans are subject to a special rule that requires payments to certain employees (called "specified employees" in IRC 409A) to be delayed for six-months following a seperation from service. This summary is intended to assist sponsors in developing administrative procedures for compliance with this special rule.
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Passive investment options continue to grow in popularity and now represent approximately 40% of total equity fund assets1. They are efficient at providing broad exposure to a number of asset classes at a low cost. Active investing provides the potential for higher returns, but at the risk of underperformance, particularly during extended bull markets. Active management benefits from risk oversight and may provide downside protection relative to market benchmarks. We expect the performance of active and passive managers to be complementary over a full market cycle. Retirement plan sponsors that offer a diversified menu of active and passive managers to participants may provide smoother long term returns, as well as gain exposures to asset classes that are otherwise unavailable passively.
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Top hat retirement plans (unfunded arrangement that benefit a "select group of management or highly compensated employees" and more commonly known as "Non-Qualified deferred compensation plans") are exempt from most of the requirnment of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including the obligation to file annual information returns with the IRS on Form 5500.
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