PersonalThe funds held in a properly designed rabbinical trust fund are usually included in your employee`s gross income when NQDC benefits are paid to staff. However, the IRS may tax a staff member on contributions to an NQDC plan before receiving plan assets according to the constructive reception doctrine (which requires taxation where the worker has funds without substantial restrictions), the economic benefits doctrine or, if the NQDC plan does not meet the requirements of Section 409A of the IRC. The terms of the original rabbis` trust fund suggested that assets that irrevocably contributed to the trust fund are not paid to the rabbi or his beneficiaries until death, disability, retirement or termination of employment. While awaiting one of these events, the rabbi could not cede or mortgage the trust of the municipality`s creditors. The IRS decided that the funding of the trust did not immediately tax the rabbi, since the assets could not be transferred or transferred by the rabbi, the rabbi did not have access to the trust and those assets were subject to the general creditors of the commune. There are several other provisions that employers should consider when developing rabbinical trusts. These include a savings clause under Section 409A (the plan and confidence must be consistent with Section 409A and interpreted accordingly), a provision that the trust does not create third-party rights or responsibilities, a provision stipulating that the trust agreement is binding on successors and compensation provisions. A “rabbinical trust” is so called because the first such trust was established by a Jewish community for its rabbi. The municipality requested and received a private letter (PLR) from the Internal Revenue Service (IRS) clarifying the tax implications of the creation of the trust to the rabbi. [1] To avoid immediate taxation of the rabbi, careful navigation between two major tax doctrines was required.

Since taxpayers are not allowed to rely on PLRs issued to other taxpayers, many employers have requested plRs regarding their confidence plans after Rabbi PLR`s initial confidence was issued. Finally, the IRS decided to limit the emission of these PLRs. Instead, the IRS issued the rabbi`s language of confidence in the income procedure 92-64.