CUNA calls for not-for-profit excise tax parity from Treasury

CUNA wrote to the Treasury Monday to call for parity for executive compensation at not-for-profit employers, agreeing with a recent letter sent by the American Society of Association Executives (ASAE) that called on the Treasury to provide parity between for-profit and not-for-profit organizations by grandfathering not-for-profit employer contracts in effect on or before Nov. 2, 2017.

The Tax Cuts and Jobs Act (TCJA) imposes a 21% excise tax on certain executive compensation provided by tax-exempt organizations. The bill grandfathers similar executive compensation contracts at for-profit institutions in effect on or before Nov. 2, 2017.

CUNA also supported another ASAE request, that the Treasury, in the absence of a grandfather rule, issue guidance permitting an allocation of benefit amounts over the life of a 457(f) nonqualified deferred compensation plan.

The plan benefit should be allocated on a ratable basis to each of the years included in the vesting period, which CUNA believes better reflects the way the plans are funded by the employer.

“In addition, CUNA supports ASAE’s request that Treasury issue guidance confirming that Section 457(f) plan benefits that vested on or before Dec. 31, 2017 (in other words, before the effective date of the TCJA and the excise tax) are exempt from the excise tax, even if the benefits are paid on or after January 1, 2018,” the letter reads. “In the absence of this requested Treasury guidance, a retroactive tax will be imposed on employee retirement amounts that have been accumulated and vested over many years.”

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