In determining how to compensate their key executives,

employers frequently consider the use of "Top-Hat" Plans. A top-hat plan is a non-qualified program of deferred compensation. In evaluating whether to use a top-hat plan, employers may wish to compare such plans with the use of a Cash Balance Pension Plan. A cash balance plan is a qualified retirement plan.

There are advantages and disadvantages to both plans, and examining these in detail can help executives determine which plan is best for their company.