Expected impact of 457(f) regulations on credit union plans

Guest post written by Jim Patterson, Attorney for Burns-Fazzi, Brock

After years of waiting, we are hearing rumblings that the proposed 457(f) regulations may be issued in 2012. The IRS “anticipates” changing the current 457(f) rules to recognize only cliff vesting and disallow elective deferrals. Plans using noncompete restrictions as the sole risks of forfeiture will no longer defer taxes. Fortunately, 457(b) plans would not be affected.

As nonqualified deferral plans for credit unions normally use cliff vesting to qualify for tax deferral under 457(f), and supplemental employer contributions rather than elective deferrals, the new rules should require few if any changes to credit union plans. (Nice for a change!)

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Understanding Credit Union Salary Surveys

Guest post by Jack E. Clark, PhD, Clark & Chase Research, Inc.

With executive compensation under scrutiny, salary surveys are increasingly important.   If done correctly, surveys provide reasonable estimates of what you could expect if you had access to this data for every credit union.   Surveys are far superior to decisions based on guesswork or anecdotal information picked up from some of your colleagues.  However, not all surveys are the same and the user needs to know what to look for.

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10 Best Practices of Compensation Oversight by Your Credit Union Board

Serving on a credit union board has gotten more complicated in recent years, based on new and evolving NCUA requirements for directors.  More specifically, rule 701.4 from NCUA dictates that directors must understand the credit union’s specific financial and accounting activities and their various risks from credit and liquidity to compliance and reputation.  There are many questions on the specifics of the rule and how NCUA plans to measure compliance with it.  You are not alone if you’re wondering “how much training is required?” “what exactly does financial literacy mean to NCUA?” and, most important, “what do the regulators expect?”

A recent webcast we recorded with Jim Patterson, partner with Sherman & Patterson, Ltd. and Jen Jackson, Vice President of Compliance and Information for Burns-Fazzi, Brock, may help shed some light on this topic.  My ears perked up when Jim went through a list of 10 best practices that credit union boards should consider when overseeing compensation. Compensation oversight is an important part of rule 701.4, considering the board sets the compensation of the credit union executives. I love lists, and this one made sense to me in what can sometimes be a mess of fuzzy guidelines.

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