Tax Law Changes Bring New Excise Tax

By Liz Santos, VP Marketing, BFB Gallagher.

Chances are you’re still trying to make sense of the recent tax law changes. The changes affect nearly all taxpayers and touch a wide variety of taxes- including corporate, estate, partnership and “pass through” business entities, and individual. The changes also impact tax-exempt organizations. Known as the Tax Cuts and Jobs Acts (TCJA), the tax law changes amend the Internal Revenue Code (tax code).

The TCJA created Section 4960, which provides for an excise tax on tax-exempt entities like credit unions. The excise tax, paid by the credit union, applies on (1) compensation in excess of $1 million and (2) parachute payments for highly-compensated employees. BFB Gallagher recently explained the ins and outs of the new excise tax during a webinar for the National Association of Federally-Insured Credit Unions. The recording and slides are available online ».

Here’s the good news: using a split dollar plan can help you avoid the excise tax because plan payments do not count as compensation when calculating the excise tax. A split dollar plan also converts the benefit from a liability to a growing asset. And you can restructure an existing 457(f) plan to reduce or eliminate the excise tax.

BFB Gallagher can help you determine if your credit union is subject to the excise tax. Better yet, we can help you develop an executive benefits program that is regulator-friendly and tax-advantaged. Feel free to contact me to schedule a 30-minute discovery call.

And, just in case you’re interested in the full text of the new law, you can find it here ».

Employer Contributions Help Drive HSA Deposit Growth

By: Dennis Zuehlke, Compliance Manager, Ascensus.

Growth in health savings account (HSA) deposits continued at a rapid rate last year, with a 22 percent increase in assets from 2015 to 2016, according to the 2016 Year-End Devenir HSA Market Survey. HSAs now hold close to $37 billion in assets, based on data from the top 100 HSA providers that participated in the Devenir survey.

Employer Contributions & HSA Growth

The growth in HSA deposits is being driven in part by employer contributions. High-deductible health plan (HDHP) enrollees are frequently opening HSAs in part to take advantage of employer contributions. Employers initially made contributions to their employees’ HSAs as an incentive for employees to choose HDHPs over traditional medical plans. Even as HDHPs have increasingly become the only plan option for larger employers, most employers still make contributions to their employees’ HSAs. And, the percentage of employers making contributions, and the dollar amount of employer contributions continues to rise.

The 2016 Employee Benefits Research Institute (EBRI)/Greenwald & Associates Consumer Engagement in Health Care Survey found that 78 percent of HDHP enrollees reported that their employer contributed to their HSA, up from 67 percent in 2014. The survey also found that 20 percent of HDHP enrollees reported an employer HSA contribution of $2,000 or more in 2016, and 42 percent of HDHP enrollees reported an employer HSA contribution of $1,000 – $1,999 in 2016, up from 10 percent and 36 percent respectively in 2014.

The Devenir survey found that in 2016, employer contributions accounted for 26 percent and employee contributions accounted for 46 percent of all HSA contributions. Among employers making contributions, the average employer contribution was $868, and among employees making contributions, the average employee contribution was $1,786. The other 19 percent of all HSA contributions came from individuals and were made to accounts not associated with an employer. The average contribution made to these HSAs, for individuals making contributions, was $1,713, according to Devenir’s findings

Credit Unions Benefit from Offering HSAs to Members

Credit unions offering HSAs to their members are benefitting from strong HSA deposit growth, but HSA penetration in the credit union space is low, with credit unions hold less than 4 percent of all HSA assets, according to Devenir. If your credit union is not offering HSAs, opportunities abound both for your members and your credit union, as double-digit growth in both the number of HSAs and HSA deposits is expected to continue for the foreseeable future as more employers switch to HDHPs.

Learn more about this topic by listening to our recent podcast: “Not Offering HSAs? Your Credit Union is Missing a Chance to Grow

Ascensus Logo NewAscensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting. To learn more about our partner, visit


Why Your Cloud Partner Matters To Your Members

By Gregg Early, Strategic Content Director, Geezeo.

There is certainly a lot of talk these days about the power of Fintech.

So, it’s understandable to ask whether all this is integral to the mission of credit unions since credit unions are driven by a different set of goals and values than a traditional bank is.

The answer is emphatically, Yes!

The latest Fintech trends are as crucial for credit unions as they are for any other financial institution. And it’s precisely because of CUs’ special role in the financial community that Fintech can become a very powerful tool for your members. The cloud presents lots of opportunities.

For you, a quality cloud means security for member data, faster response times for all your digital banking demands and most important, better tools for you to learn the needs of your individual members. The more you understand their needs, the better you can serve them with your products. The cloud can offer you, your members and member data, plenty of enrichment.

A Quality Cloud Is Key

As a SaaS provider in the digital financial management space, we’ve been preaching the power of the cloud for a long time. We got into the digital financial management business in 2006 and also saw the potential power of the cloud while it was just a blip on other’s radar screen. And it’s why we linked up with Amazon Web Services (AWS) as our primary cloud partner right out of the gate.

Nowadays, AWS is the leader in the cloud computing business ($4.6 billion in revenue in Q3) because it was thinking ahead, anticipating the market demand and building in powerful tools for its clients.

“Fundamentally, the cloud lets you play,” observes James Elwood, Geezeo CTO. “The strength of working in the cloud is, CUs can maximize the flexibility and adaptability in how they manage their systems’ needs. It gives them wider latitude to manage the mix of services and products they consume to find solutions that best serve their members. And a cloud service like AWS provides the greatest opportunities to serve those needs and ultimately their members.”

On the member side, it enables them to merge their accounts in one place and manage their entire financial life in one spot. This is not only incredibly convenient but allows each member to feel like they have a custom-built experience with their CU.

And the more successful you are at serving your members, the more successful your credit union will be in fulfilling its mission.

Geezeo is the NAFCU Services Preferred Partner for Personal Financial Management (PFM). More educational resources and contact information are available at

CFPB’s Future May be Cloudy, but the Outlook is Bright for Credit Unions

By: Beth Planakis, Director of Marketing, Velocity Solutions.

It’s hard to believe it’s been seven years since the formation of the CFPB, but it’s easy to remember what fueled its creation – a financial crisis that Americans hadn’t seen since the Great Depression. And what was one of the most flammable fuels in the fire? Mortgages. Specifically, mortgages that consumers couldn’t afford, couldn’t understand, and for which, in years prior, would never have qualified.

So, as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB was formed to protect consumers from unfair, deceptive or abusive practices in their dealings with financial services and products. Fortunately, the subprime mortgage crisis has since been reigned in, but the bureau has long monitored other types of predatory lending – namely, high-cost payday loans.

While Richard Cordray was Director of the CFPB his expectations were very clear that banks and credit unions could and should be low-cost providers of small-dollar loans, and that payday loans should be more closely regulated. So he proposed a payday lending rule and made significant progress with his agenda. On October 3, 2017, the CFPB cracked down on this “predatory practice” and issued its final payday lending rule, restricting lenders’ ability to profit from high-interest, short-term loans. The tough new restrictions were predicted to essentially decimate the storefront payday lending industry, potentially resulting in up to an 80%* plunge in payday loan volume. The $37,000 annual profit generated by the average storefront lender was estimated to become a $28,000 loss*. That’s a bleak outlook for payday lenders.

Flash forward to today. We’re now living in a post-Cordray world, with front-row seats to a helter-skelter leadership scuffle in the CFPB. Mick Mulvaney, the newly appointed Director of the CFPB, has vehemently voiced his opposition to the payday lending rule. However, it appears that the rule will not be rescinded by the CFPB itself, and it is debatable whether Congress will use its authority under the Congressional Review Act to overturn the rule.

So, what does this mean for credit unions? How can they better serve their members despite the uncertainty?

Proponents of the CFPB say it’s a watchdog agency working for American consumers, and that the payday rule will protect consumers from lenders behaving badly. Opponents believe the CFPB has too much power and that the rule is limiting consumers’ access to liquidity, and even their right to choose how to obtain that liquidity.

But whatever the outcome of the payday lending rule, credit unions have an enormous opportunity to better serve their members with small-dollar loans that are responsible, affordable and compliant.

If the rule takes effect as scheduled in 2019, consumers will be desperate for sources to obtain emergency cash with the storefront payday lenders closing shop. If the rule is overturned, it’s still just as critical to offer your members smarter, more affordable loan options, and to help educate consumers that these superior options exist. Now is the time for credit unions to step in and provide low-risk and affordable small-dollar loans for their members in need of emergency cash.

Here are the top 5 reasons this is a grand slam for credit unions, regardless of the future of the CFPB’s payday lending rule:

  1. Provide a new valuable service to your members, increasing loyalty, retention and lifetime value.
  2. Generate a new source of revenue from members paying high fees elsewhere.
  3. Protect your members from predatory lenders.
  4. Acquire new members by promoting an affordable and convenient small-dollar loan option.
  5. Work more efficiently and effectively. By joining with a partner company that offers a comprehensive, automated solution, your credit union will benefit:
    • No additional loan officers or other additional staff needed
    • Underwriting technology that is automated and proven
    • Assistance with compliance best practices
    • Data-driven marketing to educate consumers about the availability of lower-cost loans

Seize the opportunity now, and make it a resolution to implement a small-dollar, short-term loan solution in early 2018!

Velocity SolutionsVelocity Solutions is the NAFCU Services Preferred Partner for Account Holder Premium Card Rewards Program and Overdraft Management Solutions. More information and educational resources are available at

*New York Times, Payday Lending Faces Tough New Restrictions by Consumer Agency, October 5, 2017.