Four steps for dealing with excise tax
No grandfather provision so far for deferred comp plans.
May 15 was the first payment date for the 21% excise tax on annual executive compensation in excess of $1 million to any one of a CU’s top-five paid executives. The tax was part of the Tax Cuts and Jobs Act of 2017. For some credit unions, a deferred compensation plan payout in 2018 pushed an executive’s compensation above the $1 million threshold, triggering the tax.
If your credit union is in that situation, you may have been hoping that deferred compensation plans put in place before the law was passed would be grandfathered. So far, that hasn’t happened.
Industry advocates, including CUNA Mutual Group, have helped garner bipartisan support for a grandfather provision. But the House and Senate are at an impasse over larger tax reform issues, so it’s unlikely this type of change will come to a vote anytime soon.
It’s best to assume the excise tax will be in effect for the foreseeable future. Here are four steps you can take to mitigate its impact:
continue reading »
