Rabbi Trusts - Disclosures & Approvals?

[Guest Mariko]

A publicly held corporation has an existing DCP and is thinking about implementing a Rabbi Trust.

1. Do they need board approval on just the Trust implementation? They already have BOD approval for the plan.

2. Any other necessary disclosures - proxy/annual report/etc.? I don't think so, but always defer to my peers to bring up something I've never heard of

With the pending legislation, I think that Rabbi Trust implementations will probably become popular with existing plans that don't have them. Appreciate your thoughts on this matter.

Thanks!

[Ron Snyder]

1. Yes, since the Trust potentially takes away ownership of the assets from the company on conditions provided.

2. R&D items and employee rights remain the same. However, disclosure of the Rabbi Trust in the plan summary would be required. Whether any other requirements will exist may be affected by pending legislation.

[QDROphile]

What plan summary?

[GBurns]

Would a Rabbi Trust be set up if there was no plan?

[Ron Snyder]

Questions are posted to no one in particular. So no one in particular will take a stab at them.

To GBurns: No. What would a Rabbi Trust be used for if there were no plan?

To QDROphile: ERISA doesn't apply to NQDC and formal SPDs are not required. But even under common law and statutes that apply to employment relationships a description of benefit programs would be required. Such a description, presumably shorter than the full-blown plan, would normally range from a one-page announcement letter to a complete SPD comparable to those under qualified plans.

[mbozek]

Veba :

Top hat NQDC are subject to ERISA but they are exempt from all requirements except filing of a notice with the DOL, QDROs and claims procedures. State laws are preempted including state labor laws.

A funded NQDC plan is subject to all of ERISA's requirements. State laws are preempted including state labor laws.

Unfunded excess benefit NQDC are exempt from ERISA and are subject to state laws.

[Ron Snyder]

mb: Top hat NQDC are subject to ERISA but they are exempt from all requirements except filing of a notice with the DOL, QDROs and claims procedures.

You are correct.

mb: A funded NQDC plan is subject to all of ERISA's requirements. State laws are preempted including state labor laws.

Your question had to do with whether there was "no plan", not whether a plan was funded or not.

[QDROphile]

So for a top hat plan there is no requirement for a plan summary.

[GBurns]

QDROphile

Then how would you notify plan participants of the plans terms and conditions etc? Give them a copy of all the documentation? Wouldn't it be better to summarize into an easily read and explained summary?

[QDROphile]

Depends. I was testing whether a "plan summary" was "necessary." What is sensible communication and what is "necessary," especially with an implied form, are two different matters.

[GBurns]

vebaguru pointed out some things and used the term "would be required". Either observance of any applicable law (including contract law) or just plain prudence dictates what "would be required". Unless there is some omniscience involved, one is prudent to cover one's "assets" and do what "might turn out to be required".

There are some things that either ERISA or other law might "require". No one ever has to do what is required. One can always pay the penalty. It is prudent to do what is required. It is even more prudent to do what "might be required".

In other words, all I am saying is that it is "necessary" to be "sensible".

[Ron Snyder]

Exactly.

[TCWalker]

To the original question, I think the Rabbi Trust would require authorization unless previously delegated to an admin committee.

The other side of the SPD/Plan/Outline agrument is more documents foster more inconsistencies. A "one page" summary w/the enrollment form revised annually seems appropriate to me vs the SPD approach.