Executive compensation tax final regs take effect Jan. 1
A new regulatory update explains key changes your credit union should know
In January 2021, the IRS issued final regulations on the 21% excise tax levied against credit unions beginning in 2018 based on the income of certain highly compensated employees. The final regulations mostly match the IRS’s previous compliance guidance, but credit union leaders should understand a few changes and clarifications in the final version.
CUNA Mutual Group’s John Pesh, director of executive benefits, overviews key modifications within these final regulations for IRS Section 4960 that could affect your credit union in a new, downloadable regulatory update.
I’ll summarize some of the update’s main points, but first, here’s some basic background:
- The excise tax is contained in Internal Revenue Code, Section 4960 (“Tax on Excess Tax-Exempt Organization Executive Compensation”), added by the Tax Cuts and Jobs Act of 2017.
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