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.
Alaska Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, also known as a Rabbi Trust, is a type of trust established by Alaska employers for the benefit of their executive employees. This trust serves as a nonqualified deferred compensation plan, allowing executives to defer a portion of their income for retirement or other future financial needs. A Rabbi Trust is a popular option for employers who want to provide additional retirement benefits to their key executives. It offers advantages like tax-deferred growth and the ability to tailor the plan to meet the unique needs of each executive. By setting up a trust, employers can ensure that the deferred compensation is protected from any potential financial risks faced by the company. The Alaska Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, has different types based on the specific features and provisions: 1. Revocable Rabbi Trust: This type allows the employer to make changes or revoke the trust at any time. 2. Irrevocable Rabbi Trust: In contrast to the revocable trust, this type cannot be altered or revoked once established. It provides a greater level of security for executive employees. 3. Voluntary Rabbi Trust: This trust type allows executives to voluntarily elect to defer a portion of their income. 4. Involuntary Rabbi Trust: This type requires executives to defer a specific portion of their compensation as determined by the employer. It helps the employer ensure compliance with applicable tax regulations. The Alaska Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is governed by specific regulations and guidelines outlined by the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act (ERICA). Employers must ensure compliance with these regulations to maintain the tax advantages associated with the trust. In conclusion, the Alaska Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a valuable tool for employers in Alaska seeking to provide additional retirement benefits to their key executives. Various types of trusts can be established to suit the specific needs of both the employer and the executive employees. Understanding the regulations and guidelines surrounding these trusts is crucial for maintaining compliance and maximizing their benefits.
