Deadline to establish a Rabbi Trust

[JustMe]

Client recently notified us that they have a 457(b) plan for their executives and they are not sure if they have a Rabbi Trust in place.  Their plan was established over 10 years ago.  Is there a problem with establishing one for the assets now?

[Peter Gulia]

If the plan is unfunded and the employer did not set aside its property under a rabbi trust, it seems likely the property remains the employer’s property.

If the employer owns the property, the employer can volunteer to subject its property to a little restraint.

If the participants want tax-deferred treatment, they would want a rabbi trust that does not result in the deferred compensation obligation becoming funded or secured, and does not result in a current economic benefit.

[XTitan]

Since a rabbi trust is optional, there shouldn't be any issues with establishing now.

[Bob the Swimmer]

Should be a good idea---

We always have said a rabbi trust if properly structured can protect the participants generally from a change of heart

or a change of control by the employer, but not Chapter 11.