Turn your credit union’s SERP liability into net income

Now is a good time to investigate split-dollar plans.

As not-for-profits, credit unions are limited in what they can do to recruit and retain top talent, particularly even more so since the excise tax was implemented by IRS interim guidelines in December 2017 in response to the Tax Cuts and Jobs Act. In addition, retirement plans tied to the stock market are taking significant losses during the coronavirus pandemic—as they likely would in any bear market of prolonged price decline.

So, what does this mean for credit unions that want to set up or optimize executive retirement plans right now?

Instead of 457(f) plans that link to the bear market, executives and their boards should be investigating whole life split-dollar plans. During this time of lost income, credit unions can readily turn a 457(f) liability into a performing asset by changing to a whole life split-dollar plan.

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