DEFINITION of 'Rabbi Trust'

A trust created for the purpose of supporting the non-qualified benefit obligations of employers to their employees.

These trusts are sometimes referred to as "grantor trusts".

BREAKING DOWN 'Rabbi Trust'

Called a Rabbi trust due to the first initial ruling made by the IRS on behalf of a synagogue, these forms of trusts create security for employees because the assets within the trust are typically outside the control of the employers and are irrevocable.

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