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 Harris Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a type of trust created for the purpose of providing deferred compensation benefits to executive employees of Harris Texas. This trust is commonly used by organizations to attract and retain top-tier talent by offering additional long-term financial incentives. A "Rabbi Trust" refers to a specific type of granter trust structure commonly utilized in nonqualified deferred compensation plans. The term "Rabbi Trust" originates from a 1981 private letter ruling by the IRS that involved a Rabbi who wanted his deferred compensation to be held in trust instead of the employer's general assets. Since then, the term has been widely used to describe similar trusts established for executive compensation plans. The Harris Texas Nonqualified Deferred Compensation Trust serves as a safeguard to protect the deferred compensation benefits promised to executive employees. By establishing a trust, the employer effectively segregates the funds and ensures they remain available for payout even in the event of an unforeseen financial setback or change in ownership. Some common types of nonqualified deferred compensation plans utilized within the framework of a Harris Texas Nonqualified Deferred Compensation Trust include: 1. Salary Continuation Plan: This type of plan provides a means for executives to receive a portion of their salary or a predetermined percentage after retirement. The deferred amounts are invested and held within the trust until the agreed-upon payout date. 2. Supplemental Executive Retirement Plan (SERP): SERPs are designed to supplement an executive's retirement savings beyond what is allowed in a qualified retirement plan, such as a 401(k). Contributions to the plan are made by the employer, and the funds are typically invested on the executive's behalf until retirement. 3. Deferred Bonus Plan: This plan allows executives to defer a portion of their annual bonus payments. By deferring the receipt of these bonuses, executives may benefit from potentially lower tax rates upon payout and further compound their investment growth. 4. Stock Appreciation Rights: Some nonqualified deferred compensation plans offer executives the opportunity to receive benefits based on the appreciation of the employer's stock. As the company's stock value rises, executives may receive additional compensation upon retirement based on the increase in the stock price. It is important to note that the structure and features of a Harris Texas Nonqualified Deferred Compensation Trust may vary depending on the specific needs and objectives of the organization. Therefore, it is advisable for executives and employers to consult with legal and financial professionals who specialize in executive compensation plans to ensure compliance with applicable regulations and to tailor the plan to meet their unique requirements.The Harris Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a type of trust created for the purpose of providing deferred compensation benefits to executive employees of Harris Texas. This trust is commonly used by organizations to attract and retain top-tier talent by offering additional long-term financial incentives. A "Rabbi Trust" refers to a specific type of granter trust structure commonly utilized in nonqualified deferred compensation plans. The term "Rabbi Trust" originates from a 1981 private letter ruling by the IRS that involved a Rabbi who wanted his deferred compensation to be held in trust instead of the employer's general assets. Since then, the term has been widely used to describe similar trusts established for executive compensation plans. The Harris Texas Nonqualified Deferred Compensation Trust serves as a safeguard to protect the deferred compensation benefits promised to executive employees. By establishing a trust, the employer effectively segregates the funds and ensures they remain available for payout even in the event of an unforeseen financial setback or change in ownership. Some common types of nonqualified deferred compensation plans utilized within the framework of a Harris Texas Nonqualified Deferred Compensation Trust include: 1. Salary Continuation Plan: This type of plan provides a means for executives to receive a portion of their salary or a predetermined percentage after retirement. The deferred amounts are invested and held within the trust until the agreed-upon payout date. 2. Supplemental Executive Retirement Plan (SERP): SERPs are designed to supplement an executive's retirement savings beyond what is allowed in a qualified retirement plan, such as a 401(k). Contributions to the plan are made by the employer, and the funds are typically invested on the executive's behalf until retirement. 3. Deferred Bonus Plan: This plan allows executives to defer a portion of their annual bonus payments. By deferring the receipt of these bonuses, executives may benefit from potentially lower tax rates upon payout and further compound their investment growth. 4. Stock Appreciation Rights: Some nonqualified deferred compensation plans offer executives the opportunity to receive benefits based on the appreciation of the employer's stock. As the company's stock value rises, executives may receive additional compensation upon retirement based on the increase in the stock price. It is important to note that the structure and features of a Harris Texas Nonqualified Deferred Compensation Trust may vary depending on the specific needs and objectives of the organization. Therefore, it is advisable for executives and employers to consult with legal and financial professionals who specialize in executive compensation plans to ensure compliance with applicable regulations and to tailor the plan to meet their unique requirements.
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.
