ARLINGTON, Va. - During a recent phone conversation with IRS officials, Carrie Hunt, NAFCU Associate Director of Regulatory Affairs, was told that "it could be quite some time before the IRS issues guidance on nonqualified deferred compensation plans or Section 414(d) of the Internal Revenue Code. In an Aug. 3 letter to the agency, Hunt said NAFCU members are confused about the deadline in light of the lack of guidance that has yet to come from the agency on 457 plans. "While it appears in theory that a federal credit union could presently offer a nonqualified plan under the purview of IRC Section 451 and Section 409A, because the rules of IRC 457 appear to govern tax-exempt entities, a federal credit union may be reluctant to do so without further clarification," Hunt said. Nonqualified deferred compensation plans are "valuable tools to attract and retain credit union executives," Hunt wrote, adding typically, a credit union executive makes 30% less than their bank counterparts and already, credit unions are at a disadvantage in hiring qualified management." NAFCU, like CUNA and CUNA Mutual Group had also appealed to the IRS to extend the Aug. 15 deadline since the tax treatment of nonqualified plans had not been resolved. The IRS is standing by the Aug 15 deadline.
NAFCU Concurs, More Broader Guidance Needed Before 457b August 15 Deadline
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