Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

A top hat plan is designed for a select group of management or highly compensated employees, providing significant flexibility in terms of both contributions and payouts compared to other retirement plans. These plans are not subject to the same regulatory restrictions as qualified plans, allowing employers to customize contributions and benefits to meet specific employee needs.

This flexibility means that employers can decide how much to contribute to the employees' accounts and can structure the payout options to align with the employees' circumstances and preferences. This can be particularly useful in attracting and retaining top talent, as it can be tailored to provide enhanced benefits that may not be available through standard retirement plans.

In contrast, standard pension plans provide fixed benefits based on a set formula and are typically more rigid in terms of contribution limits and payout structures. Employee stock ownership plans and government retirement plans also have more guidelines and requirements governing contributions and distributions. Therefore, the top hat plan stands out for its accommodating nature in the management of contributions and benefits.