As part of the agreement stemming from the "fiscal cliff" negotiations, Congress adopted tax changes in 2013 that could bring challenges for non-profit organizations and their senior executives and management staff. Executive compensation has always been a complex issue, and these new tax increases may present a greater need for executives and management staff to reduce their includable compensation to offset some of the anticipated tax increases. Tax changes taking effect this year that will likely affect highly compensated individuals include: an increase in the highest, marginal tax bracket to 39.6%, up from 35%; significantly reducing the impact of deductions for mortgage interest, state and local income taxes, property taxes, and charitable contributions; and an increase in the long-term capital gains and dividend taxes. Most individuals with enough income to make them subject to these tax increases will likely be eligible for a non-profit organization’s 457(b) retireme

As part of the agreement stemming from the "fiscal cliff" negotiations, Congress adopted tax changes in 2013 that could bring challenges for non-profit organizations and their senior executives and management staff. Executive compensation has always been a complex issue, and these new tax increases may present a greater need for executives and management staff to reduce their includable compensation to offset some of the anticipated tax increases. Tax changes taking effect this year that will likely affect highly compensated individuals include: an increase in the highest, marginal tax bracket to 39.6%, up from 35%; significantly reducing the impact of deductions for mortgage interest, state and local income taxes, property taxes, and charitable contributions; and an increase in the long-term capital gains and dividend taxes. Most individuals with enough income to make them subject to these tax increases will likely be eligible for a non-profit organization’s 457(b) retireme

If you sponsor a non-governmental 457(b) tax-exempt plan for your key management and highly compensated employees, perhaps the most significant administrative task occurs at the time participants sever employment.  Each 457(b) plan has a specified time period by which a participant may make an election to defer payment and timely postpone taxation by electing a future distribution date.  If no timely election is made by the end of the specified time period (“default date”), payment will commence within a generally brief period of time after the default date elapses, which may not be what the participant intended. Why must there be a default date? 457(b) tax-exempt plans are non-qualified plans, and in accordance with the Internal Revenue Code, all non-qualified plan assets are taxed at the point the funds are made available to the participant. This is also referred to as “constructive receipt.”  Regardless of whether the funds are actually distributed to the participant, the funds are