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Matching Contributions to Top Hat Plans

Q. I have just installed a 457(b) top hat plan for a 501(c)(3) employer. The employer would like to make matching contributions for the select group of management employees included in the top hat plan. Are matching contributions permitted, and, if so, how do they work?

A. Yes, the employer could choose to make matching contributions to the top hat plan, keeping two things in mind: 

1. the limit of $18,000 (in 2015) applies to both the employee’s salary reduction contributions and the employer matching contributions; and 

2. payroll taxes, including FICA, must be paid and withheld for the employer contributions since they are treated as salary reduction contributions. 

08/18/15


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