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 Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, commonly known as a Rabbi Trust, is a legal arrangement designed to provide a nonqualified deferred compensation benefit for executive employees. This trust is specific to Lima, Arizona, and it offers a way for companies in the region to attract and retain top executive talent by providing attractive compensation packages. A Rabbi Trust acts as a funding mechanism for executive deferred compensation plans. It is established and maintained by an employer to set aside funds that will be used to pay future compensation to designated executives. These funds are generally not subject to immediate taxation as long as certain criteria are met, providing potential tax savings for both the employer and the executive employee. The Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust offers a range of benefits for both companies and employees. For employers, it provides a flexible and customized approach to reward executives who have made significant contributions to the company's success. It allows employers to defer compensation payments, helping them manage cash flow and potentially reducing current taxable income. Executive employees, on the other hand, benefit from the ability to defer receiving the income until a later date when they may be in a lower tax bracket or when they retire. This can help minimize their tax liability and increase the overall value of their compensation package. It's important to note that there may be different types or variations of the Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, depending on the specific needs of the company and its executive employees. Some common variations include: 1. Defined Contribution Rabbi Trust: This type of trust allows executives to contribute a portion of their compensation to the trust, and the company may match a certain percentage of the contribution. The funds in the trust can then be invested, potentially growing over time. 2. Supplemental Executive Retirement Plan (SERP) Rabbi Trust: This type of trust is often used to provide retirement benefits for executives. It allows employers to promise future retirement payouts to executives and fund those promises through the trust. 3. Rabbi Trust with Employer Stock: In some cases, companies may choose to contribute employer stock into the trust. This allows executives to benefit from potential stock appreciation and aligns their interests with the company's success. In summary, the Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a valuable tool that enables companies in Lima, Arizona, to offer deferred compensation benefits to their executive employees. It provides a reliable and tax-efficient method for rewarding and retaining top talent, while also offering flexibility and potential tax savings for executives.The Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, commonly known as a Rabbi Trust, is a legal arrangement designed to provide a nonqualified deferred compensation benefit for executive employees. This trust is specific to Lima, Arizona, and it offers a way for companies in the region to attract and retain top executive talent by providing attractive compensation packages. A Rabbi Trust acts as a funding mechanism for executive deferred compensation plans. It is established and maintained by an employer to set aside funds that will be used to pay future compensation to designated executives. These funds are generally not subject to immediate taxation as long as certain criteria are met, providing potential tax savings for both the employer and the executive employee. The Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust offers a range of benefits for both companies and employees. For employers, it provides a flexible and customized approach to reward executives who have made significant contributions to the company's success. It allows employers to defer compensation payments, helping them manage cash flow and potentially reducing current taxable income. Executive employees, on the other hand, benefit from the ability to defer receiving the income until a later date when they may be in a lower tax bracket or when they retire. This can help minimize their tax liability and increase the overall value of their compensation package. It's important to note that there may be different types or variations of the Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, depending on the specific needs of the company and its executive employees. Some common variations include: 1. Defined Contribution Rabbi Trust: This type of trust allows executives to contribute a portion of their compensation to the trust, and the company may match a certain percentage of the contribution. The funds in the trust can then be invested, potentially growing over time. 2. Supplemental Executive Retirement Plan (SERP) Rabbi Trust: This type of trust is often used to provide retirement benefits for executives. It allows employers to promise future retirement payouts to executives and fund those promises through the trust. 3. Rabbi Trust with Employer Stock: In some cases, companies may choose to contribute employer stock into the trust. This allows executives to benefit from potential stock appreciation and aligns their interests with the company's success. In summary, the Lima Arizona Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a valuable tool that enables companies in Lima, Arizona, to offer deferred compensation benefits to their executive employees. It provides a reliable and tax-efficient method for rewarding and retaining top talent, while also offering flexibility and potential tax savings for executives.
