What Does Rabbi Trust Mean?
A rabbi trust is a non-qualified income deferral system for higher-paid employees meant to increase retirement money compared to qualified benefit programs.
Insuranceopedia Explains Rabbi Trust
Rabbi trusts are for employees whose earnings are higher compared to those who usually avail of traditional plans like 401(k) plans. Simply put, considering their income, they wish to get more retirement money. With a Rabbi's Trust, employers deposit a fraction of the annual income into an irrevocable, tax-deferred trust.
The term comes from a former IRS rule that granted a similar compensation package for rabbis.