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.
Description: The Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a specialized form of nonqualified executive compensation plan. The trust is designed to provide executive employees with a tax-deferred means to save for retirement or other future financial needs outside the limitations and restrictions of qualified retirement plans. This type of trust is commonly established by employers to attract and retain top-tier executive talent. By offering additional compensation and retirement savings options, employers can provide executives with a competitive benefit package. The Clark Nevada Nonqualified Deferred Compensation Trust operates by deferring a portion of an executive employee's compensation into the trust. This deferred compensation is then invested and grows tax-deferred until the executive reaches a predetermined triggering event, such as retirement, disability, or a specified date. At that point, the executive can begin receiving regular payments or a lump sum payout from the trust. One benefit of utilizing a Rabbi Trust is the security it provides for both the employer and the executive employee. The trust assets remain separate from the employer's general assets, reducing the risk of loss in the event of bankruptcy or other financial distress. This element of security is especially important when dealing with large amounts of deferred compensation. Different types of Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust may include: 1. 401(k) Rabbi Trust: This type of trust is established specifically to mirror the provisions of a traditional 401(k) plan, allowing executives to defer a portion of their salary and invest it for retirement. 2. SERP Rabbi Trust: A Supplemental Executive Retirement Plan (SERP) Rabbi Trust is designed to provide additional retirement benefits to highly compensated executives above and beyond what is available through a qualified retirement plan. 3. Performance-Based Rabbi Trust: This trust may be established to incentivize executive employees by tying the deferred compensation to the performance of the company or individual. The trust assets would be distributed based on predetermined performance criteria, such as meeting certain financial targets or achieving specific goals. When establishing a Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, it is crucial to consult with legal and financial professionals to ensure compliance with applicable laws and regulations.Description: The Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, also known as a Rabbi Trust, is a specialized form of nonqualified executive compensation plan. The trust is designed to provide executive employees with a tax-deferred means to save for retirement or other future financial needs outside the limitations and restrictions of qualified retirement plans. This type of trust is commonly established by employers to attract and retain top-tier executive talent. By offering additional compensation and retirement savings options, employers can provide executives with a competitive benefit package. The Clark Nevada Nonqualified Deferred Compensation Trust operates by deferring a portion of an executive employee's compensation into the trust. This deferred compensation is then invested and grows tax-deferred until the executive reaches a predetermined triggering event, such as retirement, disability, or a specified date. At that point, the executive can begin receiving regular payments or a lump sum payout from the trust. One benefit of utilizing a Rabbi Trust is the security it provides for both the employer and the executive employee. The trust assets remain separate from the employer's general assets, reducing the risk of loss in the event of bankruptcy or other financial distress. This element of security is especially important when dealing with large amounts of deferred compensation. Different types of Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust may include: 1. 401(k) Rabbi Trust: This type of trust is established specifically to mirror the provisions of a traditional 401(k) plan, allowing executives to defer a portion of their salary and invest it for retirement. 2. SERP Rabbi Trust: A Supplemental Executive Retirement Plan (SERP) Rabbi Trust is designed to provide additional retirement benefits to highly compensated executives above and beyond what is available through a qualified retirement plan. 3. Performance-Based Rabbi Trust: This trust may be established to incentivize executive employees by tying the deferred compensation to the performance of the company or individual. The trust assets would be distributed based on predetermined performance criteria, such as meeting certain financial targets or achieving specific goals. When establishing a Clark Nevada Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, it is crucial to consult with legal and financial professionals to ensure compliance with applicable laws and regulations.
