The most common forms of employer trusts are employee stock ownership plans (ESOP) and employee pension plans. With an ESOP, the employer contributes to a trust fund and the trustee purchases stock on behalf of the employees. Pension plans earmark monies to be used as post-retirement income for the employees. In either case, the employees are considered the beneficiaries of the trust.
The main purpose of these is to allow employers to provide life insurance benefits to employees in a way that's tax-friendly to the employers. The rules that a MET must follow to be eligible for tax benefits are spelled out in IRS Notice 95-34, which states that severance benefits can only be paid out in cases where employment termination is beyond the control of an employee. If you're an employer, call the Law Office of Dustin Whittenburg and let him help you determine which ESOP or employee pension plan is best for both your employees and your business. In addition, he can help to determine whether or not entering into an MET would benefit your business and employees. Call (210) 343-5316 to get started.