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Hospital Employee Perks
LaVerne L. Dotson; JD, CPA
To help provide security for an important or especially valued employee, and at the same time defer taxation, a hospital employer may establish a so-called Rabbi trust to hold certain assets set aside to meet its obligations under a deferred compensation arrangement.
Restrictions
Such a trust simply restricts the use of the funds solely to meeting its obligations to the healthcare employee, and rights to benefits under the trust cannot be sold, transferred, assigned, or otherwise alienated.
Assessment
However, if the hospital employer should become bankrupt or insolvent, the trust assets will be subject to the claims of the employer’s creditor; not the employee. To provide additional security for an employee will result in the arrangement being considered “funded” for tax purposes and therefore taxable to the employee when set aside; thus nullifying the trust.
Conclusion
As a hospitalist or healthcare employee, have you ever been offered the deferred compensation arrangement, known as a “Rabbi trust”; please comment?
Related Information Sources:
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Financial Planning: http://www.jbpub.com/catalog/0763745790
Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Administrative Terms: www.HealthDictionarySeries.com
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Filed under: Career Development, Retirement and Benefits |
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Modern Example
Lido Anthony “Lee” Iacocca, most commonly known for his revival of the Chrysler Corporation in the 1980s, was recently said to have lost his retirement pension, car and driver. These benefits were subject to Chrysler creditors, as a Rabbi Trust, and were lost in the bankruptcy.
Mark
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