Converting rabbi trust to secular trust caused thrift to violate federal regulations

Article Abstract:

The US Court of Appeals for the Seventh Circuit ruled in Maher v. Harris Trust that conversion of a rabbi trust into a secular trust violated thrift institution regulations as establishment of a pension fund that could materially damage the institution. The plan participants argued that the regulations did not apply because of solvency, but the court found that the solvency was on paper alone. When the conversion occurred, the trust was in constructive receipt of the funding. The court did not address whether the participants would receive tax relief for the taxes withheld as a result of the conversion.

Cases, Savings and loan associations, Fraudulent conveyances

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Personal retirement asset management (or how to turn your capital accumulation plan into a retirement income plan)

Article Abstract:

The adoption of a Personal Retirement Asset Management (PRAM) approach to employer-sponsored pension plans can help employers increase the options available to their workers in a world where neither defined contribution (DC) or defined benefit (DB) plans are ideal for many workers. PRAM involves combining the best of both DC and DB plans by allowing employees more options to move money between plans upon and during retirement, offering a wider selection of investment options, expanding DC withdrawal options and offering more annuity options in the DB plan.

Analysis, Planning, Innovations, Retirement planning, Retirement income, Defined benefit plans, Defined contribution plans

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Unfunded deferred compensation: IRS provides model rabbi trust and consolidates ruling requirements

Article Abstract:

The use of rabbi trusts in conjunction with nonqualified deferred compensation plans is gaining popularity as a fringe benefit for executives. Rev Proc 92-64 provides safe harbor model trust provisions for rabbi trusts and Rev Proc 92-65 gives a list of conditions a deferred compensation plan must have for a favorable private letter ruling. Rabbi trusts do not shield benefits if a sponsor goes bankrupt, but their combination of income deferral with some protection in the case of corporate takeovers continues to make them attractive.

Trusts and trustees, Trustees, Trusts (Law)

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