MADISON, Wis. - The Internal Revenue Service has received a request to take a broader look at deferred compensation plans using a for-profit model at federally-chartered credit unions. CUNA Mutual Group has acknowledged sending a letter to the IRS requesting the agency to consider a "revenue ruling" letter that would provide FCUs with more flexibility to set up deferred compensations plans that some say could be more tax-friendly and provide a more competitive edge in wooing and retaining CEO candidates. The request surrounds an April "private letter" ruling involving an FCU's attempt to establish a non-qualified deferred compensation plan to provide benefits to an executive and whether Section 457 of the IRS Code provides rules regarding the taxation of such plans of eligible employers. On the surface, it appears that the FCU was given the authority to use a for-profit model, according to the attorney representing the FCU. Meanwhile, the IRS is deciding which branch within its Office of General Counsel will handle its revenue ruling request, said Phil Tschudy, CUNA Mutual media relations manager. "We've received many inquiries on this matter from our credit union customers," Tschudy said. In May, CUNA Mutual sent out an advisory to the nearly 1,000 FCUs that have their deferred compensation plans with the group, outlining the following options: the credit union can do "do nothing" and see what transpires from the IRS; request their own private letter ruling; request a revenue ruling which has broader implications or make changes to their existing plans based on the April 9 letter ruling keeping in mind adherence to NCUA's current regulations. CUNA Mutual also posted a sample letter on its Web site that credit unions could use as a guide. The letter, addressed to Gregory F. Jenner, Treasury's Acting Assistant Secretary for Tax Policy, says in part "because of the important unresolved issues that will flow from the (private letter ruling), and in lieu of requesting our own private letter ruling, we are requesting that a revenue ruling be issued on an expedited basis that would provide guidance as to the rules that apply to nonqualified deferred compensation plans for all federal credit unions under 501c(1), and what actions a federal credit union should take if it currently sponsors a 457 plan." -email@example.com
IRS Receives Revenue Ruling Request on CU Deferred Comp Plans, CUNA Mutual Says
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