I am setting up a NQDC plan with a Rabbi Trust for an independent contractor. The indpendent contractor wants to act as trustee. My gut reaction is that this would run afoul of the Code and result in constructive receipt. Plus, if it was allowable, everyone would be doing it. Anyone have any thoughts on the subject.

(Since the plan benefits an independent conractor and not an employee it should not be an ERISA plan and thus, I'm more concern about the tax issues.)

Your gut reaction is correct. Rev Proc 92-64 contains the IRS' model Rabbi trust. In section 4.03 of that Proc, the IRS says, "The trustee of the trust must be an independent third party that may be granted corporate trustee powers under state law, such as a bank trust department or other similar party."

If you're going to use the model trust, the independent contractor can't be the trustee.