In a rabbi trust associated with a non-qualified deferred compensation plan, who retains ownership of the assets?

In a rabbi trust linked to a non-qualified deferred compensation plan, the employer sponsoring the plan retains ownership of the assets. These trusts provide a mechanism for protecting the deferred compensation from claims of creditors while also allowing the employer to maintain control over the assets within the trust.

When the employer contributes to the rabbi trust, those assets remain on the employer’s balance sheet and do not belong to the employee until they are distributed. This means that while employees may have a beneficial interest in the trust — meaning they have the right to receive benefits in the future — the legal title and ownership of the assets stay with the employer.

This structure is intentional, as it allows the employer flexibility in managing those assets while ensuring that they are utilized for their intended purpose of providing deferred compensation benefits to employees later. Moreover, the assets in a rabbi trust are not directly available to the employee until certain conditions are met, thus emphasizing that ownership lies with the employer until the distribution occurs.