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.
Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a specialized trust arrangement designed to provide retirement benefits for executive employees of organizations based in Tarrant County, Texas. This type of trust is a popular choice for employers looking to reward and retain key executives by offering them deferred compensation benefits beyond their regular salary and traditional retirement plans. The primary purpose of a Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is to set aside funds for eligible executives, allowing them to defer a portion of their current compensation to a future date, typically retirement. By deferring a portion of their income, executives can effectively reduce their taxable income in the present, while still ensuring long-term financial security. The trust is referred to as a "Rabbi Trust" because it takes its name from a 1966 private letter ruling issued by the Internal Revenue Service (IRS) in relation to deferred compensation arrangements for a rabbi. This ruling established guidelines and requirements for the creation and operation of such trusts, which have since become widely adopted by corporations nationwide. There are a few different types or variations of Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, each with varying features and objectives: 1. Defined Contribution Rabbi Trust: In this type of trust, the employer contributes a specified amount or percentage of the executive's deferred compensation to the trust. The funds are then invested, and the ultimate benefit is determined by the performance of the trust's investments. 2. Defined Benefit Rabbi Trust: With a defined benefit rabbi trust, the employer guarantees a specific retirement benefit amount for the executive. The trust is funded accordingly, and the employer bears the investment risk to ensure the promised benefit is fulfilled. 3. Supplemental Executive Retirement Plans (SERPs): While not technically a type of trust, SERPs are often used alongside a Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust. SERPs provide additional retirement benefits to executives beyond what is offered through traditional retirement plans, such as pensions or 401(k) plans. In conclusion, the Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a valuable tool that allows employers in Tarrant County to provide valuable deferred compensation benefits to their executive employees. The trust is named after the IRS's private letter ruling and can take various forms, such as defined contribution or defined benefit trusts. When combined with a SERP, it can significantly enhance the retirement security of key executives.Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a specialized trust arrangement designed to provide retirement benefits for executive employees of organizations based in Tarrant County, Texas. This type of trust is a popular choice for employers looking to reward and retain key executives by offering them deferred compensation benefits beyond their regular salary and traditional retirement plans. The primary purpose of a Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is to set aside funds for eligible executives, allowing them to defer a portion of their current compensation to a future date, typically retirement. By deferring a portion of their income, executives can effectively reduce their taxable income in the present, while still ensuring long-term financial security. The trust is referred to as a "Rabbi Trust" because it takes its name from a 1966 private letter ruling issued by the Internal Revenue Service (IRS) in relation to deferred compensation arrangements for a rabbi. This ruling established guidelines and requirements for the creation and operation of such trusts, which have since become widely adopted by corporations nationwide. There are a few different types or variations of Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, each with varying features and objectives: 1. Defined Contribution Rabbi Trust: In this type of trust, the employer contributes a specified amount or percentage of the executive's deferred compensation to the trust. The funds are then invested, and the ultimate benefit is determined by the performance of the trust's investments. 2. Defined Benefit Rabbi Trust: With a defined benefit rabbi trust, the employer guarantees a specific retirement benefit amount for the executive. The trust is funded accordingly, and the employer bears the investment risk to ensure the promised benefit is fulfilled. 3. Supplemental Executive Retirement Plans (SERPs): While not technically a type of trust, SERPs are often used alongside a Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust. SERPs provide additional retirement benefits to executives beyond what is offered through traditional retirement plans, such as pensions or 401(k) plans. In conclusion, the Tarrant Texas Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a valuable tool that allows employers in Tarrant County to provide valuable deferred compensation benefits to their executive employees. The trust is named after the IRS's private letter ruling and can take various forms, such as defined contribution or defined benefit trusts. When combined with a SERP, it can significantly enhance the retirement security of key executives.
