A method of deferring compensation for executives is the use of a rabbi trust. The instrument was named - rabbit trust - because it was first used to provide deferred compensation for a rabbi. Generally, the Internal Revenue Service (IRS) requires that the funds in a rabbi trust must be subject to the claims of the employer's creditors.
This information is current as of December, 2007, but is subject to change if tax laws or IRS regulations change. Current tax laws should be consulted at the time of the preparation of such a trust.
The Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a specialized financial vehicle designed to provide a deferred compensation plan for executive employees in the state of Arizona. This type of trust serves as a means to defer executive compensation, enable tax advantages, and offer financial security for key executives. In Arizona, there are several variations of the Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, each tailored to meet the unique needs and preferences of organizations and their executive employees. Some common types of Arizona Nonqualified Deferred Compensation Trusts include: 1. Defined Contribution Trust: This type of trust allows executives to make contributions to the trust on a regular basis, and these contributions can be invested in various financial instruments to accumulate tax-advantaged growth over time. The ultimate benefits received by the executive employees depend on the performance of the investments chosen. 2. Defined Benefit Trust: In this type of trust, the employer commits to providing a predetermined benefit amount to the executive employees upon retirement. The benefits are calculated based on factors such as years of service, compensation level, and other predetermined factors. The trust is responsible for investing and managing the funds necessary to fulfill these future benefit obligations. 3. Supplemental Executive Retirement Plan (SERP) Trust: This type of trust serves as a supplement to an executive employee's existing retirement plan, providing additional retirement income that goes beyond the limits of qualified retirement plans. SERP trusts are often utilized to bridge the gaps between the benefits offered by traditional retirement plans and the financial needs of highly compensated executives. 4. Secular Trust: While the term "Rabbi Trust" is commonly used, some organizations may opt for a secular trust that functions similarly to a Rabbi Trust but without any religious connotations. Secular trusts offer the same benefits and advantages as a Rabbi Trust, but the name distinguishes it from trusts that may have religious affiliations. Arizona Nonqualified Deferred Compensation Trusts, including Rabbi Trusts, offer several key advantages for both employers and executive employees. These benefits include the ability to defer income taxes, accumulate tax-advantaged growth, tailor benefits to suit individual needs, and provide additional financial security beyond traditional retirement plans. In summary, the Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust provides a powerful tool for Arizona-based organizations to attract and retain top talent by offering deferred compensation plans that provide financial security and tax advantages to their executive employees.The Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a specialized financial vehicle designed to provide a deferred compensation plan for executive employees in the state of Arizona. This type of trust serves as a means to defer executive compensation, enable tax advantages, and offer financial security for key executives. In Arizona, there are several variations of the Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, each tailored to meet the unique needs and preferences of organizations and their executive employees. Some common types of Arizona Nonqualified Deferred Compensation Trusts include: 1. Defined Contribution Trust: This type of trust allows executives to make contributions to the trust on a regular basis, and these contributions can be invested in various financial instruments to accumulate tax-advantaged growth over time. The ultimate benefits received by the executive employees depend on the performance of the investments chosen. 2. Defined Benefit Trust: In this type of trust, the employer commits to providing a predetermined benefit amount to the executive employees upon retirement. The benefits are calculated based on factors such as years of service, compensation level, and other predetermined factors. The trust is responsible for investing and managing the funds necessary to fulfill these future benefit obligations. 3. Supplemental Executive Retirement Plan (SERP) Trust: This type of trust serves as a supplement to an executive employee's existing retirement plan, providing additional retirement income that goes beyond the limits of qualified retirement plans. SERP trusts are often utilized to bridge the gaps between the benefits offered by traditional retirement plans and the financial needs of highly compensated executives. 4. Secular Trust: While the term "Rabbi Trust" is commonly used, some organizations may opt for a secular trust that functions similarly to a Rabbi Trust but without any religious connotations. Secular trusts offer the same benefits and advantages as a Rabbi Trust, but the name distinguishes it from trusts that may have religious affiliations. Arizona Nonqualified Deferred Compensation Trusts, including Rabbi Trusts, offer several key advantages for both employers and executive employees. These benefits include the ability to defer income taxes, accumulate tax-advantaged growth, tailor benefits to suit individual needs, and provide additional financial security beyond traditional retirement plans. In summary, the Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust provides a powerful tool for Arizona-based organizations to attract and retain top talent by offering deferred compensation plans that provide financial security and tax advantages to their executive employees.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
