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 New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a type of trust that is commonly used by organizations to provide nonqualified deferred compensation benefits to their executive employees. This trust is established in accordance with the laws of the state of New Hampshire and is structured to ensure that funds set aside for executive compensation are kept separate from the organization's general assets. The purpose of the New Hampshire Nonqualified Deferred Compensation Trust is to provide a mechanism for employers to set aside funds for executive employees' retirement, while also allowing for potential tax advantages. By utilizing this trust, employers can provide additional compensation to executives and defer payment until a specified future date, typically retirement. There are multiple types of New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust. These include: 1. Basic Nonqualified Deferred Compensation Trust: This type of trust is the most common and straightforward form, which allows employers to set aside funds for executive compensation without immediate tax consequences for the executive or organization. 2. Rabbi Trust for Salary Deferral Arrangements: This variation of the trust is specifically designed for executive salary deferral arrangements. It enables executives to defer a portion of their salary or bonus, reducing their current taxable income while allowing the organization to set aside funds for future payment. 3. Supplemental Executive Retirement Plan (SERP) Trust: This type of trust is tailored for providing retirement benefits to executives beyond what traditional retirement plans, such as employer-sponsored 401(k) plans, offer. It allows employers to make contributions to the trust on behalf of executives, which can be distributed as supplemental retirement income in addition to other retirement benefits. 4. Deferred Compensation Restoration Plan (CRP) Trust: The CRP Trust is used to provide benefits to executives when certain limits imposed by qualified retirement plans, such as defined contribution or defined benefit plans, are reached. This type of trust allows executives to defer additional compensation beyond the limits set by qualified plans. Overall, the New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust offers employers a flexible and tax-efficient way to provide executive compensation and retirement benefits. However, it is essential to work with legal and financial advisors to ensure compliance with relevant laws and regulations.The New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a type of trust that is commonly used by organizations to provide nonqualified deferred compensation benefits to their executive employees. This trust is established in accordance with the laws of the state of New Hampshire and is structured to ensure that funds set aside for executive compensation are kept separate from the organization's general assets. The purpose of the New Hampshire Nonqualified Deferred Compensation Trust is to provide a mechanism for employers to set aside funds for executive employees' retirement, while also allowing for potential tax advantages. By utilizing this trust, employers can provide additional compensation to executives and defer payment until a specified future date, typically retirement. There are multiple types of New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust. These include: 1. Basic Nonqualified Deferred Compensation Trust: This type of trust is the most common and straightforward form, which allows employers to set aside funds for executive compensation without immediate tax consequences for the executive or organization. 2. Rabbi Trust for Salary Deferral Arrangements: This variation of the trust is specifically designed for executive salary deferral arrangements. It enables executives to defer a portion of their salary or bonus, reducing their current taxable income while allowing the organization to set aside funds for future payment. 3. Supplemental Executive Retirement Plan (SERP) Trust: This type of trust is tailored for providing retirement benefits to executives beyond what traditional retirement plans, such as employer-sponsored 401(k) plans, offer. It allows employers to make contributions to the trust on behalf of executives, which can be distributed as supplemental retirement income in addition to other retirement benefits. 4. Deferred Compensation Restoration Plan (CRP) Trust: The CRP Trust is used to provide benefits to executives when certain limits imposed by qualified retirement plans, such as defined contribution or defined benefit plans, are reached. This type of trust allows executives to defer additional compensation beyond the limits set by qualified plans. Overall, the New Hampshire Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust offers employers a flexible and tax-efficient way to provide executive compensation and retirement benefits. However, it is essential to work with legal and financial advisors to ensure compliance with relevant laws and regulations.
