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.
Idaho Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust The Idaho Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees, commonly referred to as a "Rabbi Trust," is a specialized financial vehicle designed to provide nonqualified deferred compensation benefits to executive-level employees in Idaho. A Rabbi Trust is named after the landmark court case involving a rabbi in which the court established certain requirements and guidelines for these types of trusts. While the general concept of a Rabbi Trust is the same across different jurisdictions, individual states may have specific variations and regulations. Idaho recognizes and allows the establishment of a Rabbi Trust to meet the deferred compensation needs of executive employees. This type of trust is typically used by employers as a means to attract and retain top-level talent by offering deferred compensation benefits that can be paid out at a later date. In the case of the Idaho Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust, it operates within the legal framework specific to Idaho state laws. It is important to note that each employer may have its own unique provisions within the trust, depending on their specific needs and preferences. Benefits of the Idaho Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust include: 1. Deferred Compensation Options: The trust allows executive employees to defer a portion of their compensation to be paid out at a later date, usually upon retirement, termination, or other predetermined events. 2. Tax Advantages: Contributions made to the trust are not taxed until they are distributed to the employee, providing potential tax advantages. This allows executive employees to potentially defer taxes to a future date when they may be in a lower tax bracket. 3. Asset Protection: Assets held within the trust are generally protected from the claims of creditors, offering an additional layer of security for executive employees. 4. Investment Opportunities: Executive employees may have the ability to choose from a variety of investment options within the trust, allowing for potential growth and accumulation of wealth over time. It is important to consult with legal and financial professionals familiar with Idaho state laws and regulations when considering the establishment of an Idaho Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust. Alternative or related types of Idaho Nonqualified Deferred Compensation Trusts for the Benefit of Executive Employees could include variations based on specific employer preferences, such as carve-out plans, split-dollar arrangements, or golden handcuff plans. These variations may have their own unique provisions and features tailored to the specific needs and goals of the employer and its executive employees.
