HOLLYWOOD, Fla. - Credit unions seeking talented candidates for executive positions should take a hard look at their benefit plans, according to one analyst.
Rick Boothby, executive benefits specialist for CUNA Mutual Group, told Discovery Conference attendees the number of benefits non-profit and tax-exempt organizations can offer to key executives are limited by specialized tax rules under Section 457 and Section 409A of the Internal Revenue Code.
“The good news is these limits are not the end of the story for credit unions. Fortunately, alternate plan designs are available for non-profit, tax-exempt organizations which are not governed by Section 457 or 409A. Understanding how these alternate plan designs work can help credit unions recruit, retain, reward and retire top talent,” said Boothby.
He added that CUNA Mutual, which has implemented tailored executive benefit programs at about 1,600 credit unions over the last few years, has seen “an increase in the number of credit unions implementing 457(f) Plans as a ‘golden handcuff’ or ‘glue in the seats’ tactic for retaining key executives. Credit union executives are contacted daily by head hunters offering positions in larger credit unions or other businesses outside the credit union industry. Many executives leave, lured by attractive executive benefit plans offered by competitors. In many situations, a supplemental executive retirement plan is written into the pre-employment offer letter to provide 50% to 80% of the executive’s future retirement income.”
Boothby said that in addition to attracting and retaining valuable executives, an executive benefit plan can benefit the credit union because it counters existing benefit package shortfalls, has minimal impact on the balance sheet and is easy to establish and maintain.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
