ARLINGTON, Va.—NAFCU is telling the IRS that credit unions should have the ability to maintain and offer deferred compensation plans under Section 457(f).
In a letter from Director of Regulatory Affairs Alexander Monterrubio’s regarding Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities, the trade association stated, “Credit unions are typically limited in their ability to offer competitive compensation packages to executives and senior staff members due to regulatory requirements and finite resources. As a result, deferred compensation plans under Section 457(f) are of significant importance to credit unions as they attempt to attract and retain the best executives and managers.”
“NAFCU recommends the IRS address these differing viewpoints by amending its proposal to provide a clear standard for the treatment of pre-implementation deferrals,” the letter goes on to state. “It may even be beneficial for the IRS to provide credit unions with examples of the interplay between the old regulations and new regulation in these situations.”
Monterrubio added, “NAFCU recommends that the IRS finalize the rule in the first quarter of 2017 in order to provide credit unions with, at minimum, nine months until the rules go into effect. However, the IRS should consider adopting an extended implementation period–specifically, an implementation set for two years after finalization would be an appropriate period of time for credit unions to adjust their deferred compensation plans.”