E-Systems & Raytheon Garland Retirees

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Medical Annuity Benefit Clarification (July 24, 2019)

From Eileen concerning the E-Systems Medical Annuity Benefit:

Many have expressed concern about the possibility of our E-Systems Annuity benefit being affected by the upcoming merger of Raytheon and United Technologies. The CPA who was involved with the creation of the Rabbi Trust which is the type of trust that was created for E-Systems' benefit told me that it was fully funded with no dependency on Raytheon or any other future business. It can't be touched. Here is a definition of a Rabbi Trust. No more worries!

Rabbi Trust

The trust is set up as an irrevocable trust arrangement. This means that once the employer sets up the trust and puts assets into it, they cannot go back and get the assets in the future. They cannot change anything about the trust once it is set up. The beneficiaries of the trust are the only ones that can access the funds or change any of the terms.


The primary reason to set up a rabbi trust is to provide security for the employees that get to participate in it. When a company sets up a non-qualified benefits plan without the use of a rabbi trust, the company could potentially change the terms at any point. They could take the money back out of the plan if they needed to. However, when a rabbi trust is used, it provides the employees with security because none of the terms can be changed.

One of the unique features of this type of trust is that it is not protected from creditors. With many other types of trusts, creditors do not have access to the funds if a company becomes insolvent. With the rabbi trust, if the company goes out of business, both the employees and the creditors of the company will go after the funds in the trust.

This type of trust really provides two types of security for the employees involved. They are protected against the company changing its mind and they are protected against a change to the plan if another company takes over. Even if a hostile takeover occurs, the funds in a rabbi trust will remain untouched.


What is a Rabbi Trust? - Financial Web

Rabbi Trust