This type of executive retirement plan is unfunded and can be issued upon retirement or termination without cause,but the assets must be released to creditors if the company files for insolvency or bankruptcy. (Rabbi Trusts)

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Unfunded executive retirement plans such as Rabbi Trusts are commonly used by employers to defer compensation to their high-level employees until retirement. However, unlike funded plans, the assets in a Rabbi Trust are not typically owned by the employee until actual distribution. Instead, they remain with the employer until the time of distribution. This means that in the case of insolvency or bankruptcy, the assets in a Rabbi Trust are subject to creditor claims, along with the employer's other assets. Employee-owned annuities, secular trusts, and corporate-owned life insurance are all types of funded retirement plans and do not have the same risks as an unfunded plan like a Rabbi Trust.

This Type of Executive Retirement Plan Is Unfunded and Can