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.
A District of Columbia Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a type of financial arrangement designed to provide retirement benefits to highly compensated executives. This trust is governed by the laws of the District of Columbia and offers various advantages and tax benefits to both the executives and the sponsoring employer. Keywords: District of Columbia, Nonqualified Deferred Compensation Trust, Executive Employees, Rabbi Trust, retirement benefits, highly compensated executives, advantages, tax benefits, sponsoring employer. There are different types of District of Columbia Nonqualified Deferred Compensation Trusts for the Benefit of Executive Employees — a Rabbi Trust based on their specific features and purposes, such as: 1. Revocable Rabbi Trust: This type of trust allows the employer to make changes or revoke the trust at any time before the designated benefits become payable to the executive employee. 2. Irrevocable Rabbi Trust: In contrast to the revocable trust, an irrevocable Rabbi Trust doesn't allow the employer to change or terminate the trust once it is established. This provides additional security and assurance to the executive employee. 3. Secured Rabbi Trust: A secured Rabbi Trust ensures that the deferred benefits are protected in the event of the employer's financial distress or bankruptcy. The trust assets are held separately from the employer's general assets, providing additional security to the executive employees. 4. Unsecured Rabbi Trust: Unlike the secured trust, an unsecured Rabbi Trust does not offer the same level of asset protection. The deferred benefits are considered general liabilities of the employer, which might expose the executive employees to financial risk if the employer faces financial difficulties. 5. Stand-Alone Rabbi Trust: This type of Rabbi Trust is established by a single employer solely for the benefit of its executive employees. It is independent of any existing retirement or benefit plans offered by the employer. 6. Linked Rabbi Trust: A linked Rabbi Trust is established in conjunction with an existing qualified retirement plan, such as a 401(k) or a pension plan. The deferred benefits under this trust are linked to specific provisions and requirements of the qualified plan. By understanding these different types of District of Columbia Nonqualified Deferred Compensation Trusts for the Benefit of Executive Employees — a Rabbi Trust, employers can tailor their retirement benefit offerings to best suit the needs of their executive employees, while also taking advantage of the tax benefits and financial flexibility provided by these trusts.A District of Columbia Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a type of financial arrangement designed to provide retirement benefits to highly compensated executives. This trust is governed by the laws of the District of Columbia and offers various advantages and tax benefits to both the executives and the sponsoring employer. Keywords: District of Columbia, Nonqualified Deferred Compensation Trust, Executive Employees, Rabbi Trust, retirement benefits, highly compensated executives, advantages, tax benefits, sponsoring employer. There are different types of District of Columbia Nonqualified Deferred Compensation Trusts for the Benefit of Executive Employees — a Rabbi Trust based on their specific features and purposes, such as: 1. Revocable Rabbi Trust: This type of trust allows the employer to make changes or revoke the trust at any time before the designated benefits become payable to the executive employee. 2. Irrevocable Rabbi Trust: In contrast to the revocable trust, an irrevocable Rabbi Trust doesn't allow the employer to change or terminate the trust once it is established. This provides additional security and assurance to the executive employee. 3. Secured Rabbi Trust: A secured Rabbi Trust ensures that the deferred benefits are protected in the event of the employer's financial distress or bankruptcy. The trust assets are held separately from the employer's general assets, providing additional security to the executive employees. 4. Unsecured Rabbi Trust: Unlike the secured trust, an unsecured Rabbi Trust does not offer the same level of asset protection. The deferred benefits are considered general liabilities of the employer, which might expose the executive employees to financial risk if the employer faces financial difficulties. 5. Stand-Alone Rabbi Trust: This type of Rabbi Trust is established by a single employer solely for the benefit of its executive employees. It is independent of any existing retirement or benefit plans offered by the employer. 6. Linked Rabbi Trust: A linked Rabbi Trust is established in conjunction with an existing qualified retirement plan, such as a 401(k) or a pension plan. The deferred benefits under this trust are linked to specific provisions and requirements of the qualified plan. By understanding these different types of District of Columbia Nonqualified Deferred Compensation Trusts for the Benefit of Executive Employees — a Rabbi Trust, employers can tailor their retirement benefit offerings to best suit the needs of their executive employees, while also taking advantage of the tax benefits and financial flexibility provided by these trusts.
