Structuring the Loan in Loan Regime Split Dollar

February 10, 2016

by TJ Telford, Area Vice President for BFB Gallagher and Kirk Sherman, Partner at law firm of Sherman & Patterson, Ltd

Loan regime split dollar (LRSD) is becoming a staple in credit union executive compensation packages. Over the last 15 months, the number of credit unions using LRSD has grown by 40%.1 Twenty new credit unions added LRSD each quarter. Boards like LRSD because of its favored tax treatment for the executive and cost recovery for the credit union.

LRSD designs vary widely. They—
•  Use different insurance products.
•  Vary the timing of the credit union’s deposits into the policy.
•  Impose a wide spectrum of vesting and forfeiture requirements.
•  Allow access to the funds in the policy at different times.
•  Divide the death proceeds in different ways.

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Oregon Joins the Ranks of States Permitting Credit Union Board Compensation

July 23, 2015

By Christine Burns-Fazzi and James S. Patterson*

On June 16, Oregon governor Kate Brown signed into law a bill that will permit reasonable1 compensation for members of state-chartered credit union boards of directors. The new law makes Oregon the 16th state2 to permit board compensation, and the third to permit the practice in the last three years. The bill, introduced in February, met little opposition and took only four months to be passed into law.

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Executive Compensation: Making Sense of Fair and Reasonable

July 21, 2015

By Liz Santos, SVP BFB

My little brother recently celebrated his 40th birthday. We marked the occasion by thumbing through old pictures and making fun of each other’s unfortunate haircuts. That’s Herbie on the left, in one of our rare moments of peace, prompted only by the promise of a sugary reward.

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Compensation and Severance Plan Rule Changes May Impact Your Credit Union

May 5, 2015

By Kirk D. Sherman and James S. Patterson, Sherman & Patterson, Ltd.

After almost eight years and several false alarms, the IRS may finally issue the new Section 457(f) regulations addressing nonqualified deferred compensation plans and severance plans. Two IRS attorneys speaking at separate events have expressed hope that the regulations will be released by this summer.

Credit unions at greatest risk of having to modify their plans are those that sponsor:

• Nonqualified deferral plans (other than 457(b) eligible plans) that allow elective deferrals,
• Nonqualified deferral plans that use noncompete restrictions as substantial risks of forfeiture, and
• Severance plans providing severance benefits greater than two times compensation.

For other credit unions, the new regulations may be a non-event.

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Tailoring Executive Benefits to the Executive and the Credit Union

September 15, 2014

Tailoring Executive Benefits to the Executive and the Credit Union

By David Frankil, President, Burns-Fazzi, Brock

Some people are lucky enough to be able to walk into a store, pick a nice suit off the rack, maybe have the sleeves adjusted and the cuffs hemmed, and walk out with something that fits them perfectly.

My experience is more like major surgery, but when done right the suit looks great.

The same is true for executive benefits – some rare executives and their credit unions are fortunate enough to have a set of circumstances and needs that allow them to take something basic and off-the-shelf.  But more often they end up with their proverbial arms sticking out and socks visible with cuffs four inches off the floor.  What they really need is a more complex mix of solutions that are tailor-made for them.

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