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.
Puerto Rico Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust is a specialized financial vehicle designed to provide a deferred compensation plan for high-ranking executive employees in Puerto Rico. This trust is established in accordance with the requirements of the Puerto Rico Internal Revenue Code (PR IRC) and is commonly used by businesses operating in Puerto Rico to attract and retain top-level executives. Keywords: Puerto Rico, Nonqualified Deferred Compensation Trust, Executive Employees, Rabbi Trust, Puerto Rico Internal Revenue Code, Deferred Compensation Plan, Top-level Executives Types of Puerto Rico Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust: 1. Puerto Rico Nonqualified Deferred Compensation Trust with Income Deferral: This type of trust allows executive employees to defer a portion of their income for a specified period, typically until retirement or other predetermined events. The deferred amount grows tax-deferred until it is distributed to the employee. 2. Puerto Rico Nonqualified Deferred Compensation Trust with Matched Contributions: Some employers may choose to match a certain percentage of the executive employee's deferred income contributions. This type of trust provides additional benefits to the executive employees, making it more enticing for them to participate. 3. Puerto Rico Nonqualified Deferred Compensation Trust with Investment Options: In this type of trust, executive employees have the opportunity to invest their deferred income contributions in various investment vehicles, such as stocks, bonds, or mutual funds. This allows them to potentially grow their deferred income at a higher rate. 4. Puerto Rico Nonqualified Deferred Compensation Trust with Vesting Schedule: This type of trust may include a vesting schedule, which means that executive employees gradually earn ownership rights to the deferred income contributions based on the length of their service with the employer. This incentivizes employee loyalty and commitment to the organization. 5. Puerto Rico Nonqualified Deferred Compensation Trust with Estate Planning Benefits: Some trusts may be structured to provide estate planning benefits, allowing executive employees to pass on their deferred income to their heirs or beneficiaries upon their passing. This can provide a long-term financial legacy for their loved ones. Overall, the Puerto Rico Nonqualified Deferred Compensation Trust for the Benefit of Executive Employees — a Rabbi Trust offers a flexible and attractive compensation option for executive employees in Puerto Rico, ensuring their financial security and incentivizing their continued dedication to the organization.
