Rabbi Trust
A Rabbi Trust sets aside or segregates 'unfunded' assets, which may be used to satisfy the employer's obligations to employees under one or more nonqualified plans.
Similar to an escrow account, it is an irrevocable trust established for the benefit of the participant by an employer.
The primary purpose of a Rabbi Trust is to provide and protect nonqualified plan assets. In essence, it functions as a security device, guaranteeing that funds will be available when promised.
Interestingly, the name Rabbi Trust resulted from the first IRS tax ruling that involved a rabbi whose temple established a trust to fund his deferred compensation.
