New article: Executive Compensation Arrangements for Tax-Exempt Organizations
(Posted on December 6, 2023 by Carol V. Calhoun)

Tax-exempt organizations face special legal challenges in developing compensation packages for their executives. A new article, Executive Compensation Arrangements for Tax-Exempt Organizations, published in the Lexis Practice Advisor provides practical guidance on developing benefits for executives of nonprofits.

This article is divided into the following main topics:

Executive compensation considerations for tax-exempt entities
Excise Tax on Excess Executive Compensation
Deferred compensation rules
Severance pay
Vacation and sick leave plans
Performance bonuses and other nonfixed payments
Fringe benefits

“Effect of the Tax Cuts and Jobs Act of 2017 on Nonprofits and Governments,” PowerPoint now available
(Posted on February 15, 2018 by Carol V. Calhoun)

The Tax Cuts and Jobs Act of 2017 made a number of changes affecting the compensation and benefits that governmental, church, and other tax-exempt organizations can provide to their employees. Given the short time between introduction and passage of the Act, it is not surprising that many of the new provisions are unclear in their application. Moreover, some of them may produce unintended consequences for these organizations.

As part of a symposium on “Recent Developments in Benefits/Executive Compensation Affecting Tax Exempt Organizations,” Carol V. Calhoun gave a presentation on the ways in which the Tax Cuts and Jobs Act of 2017 will affect the compensation and benefits of such organizations. A copy of the PowerPoint for her speech can be found at this link.

Nonprofits and Governments Face Compensation and Benefits Issues under the New Tax Law
(Posted on January 11, 2018 by Carol V. Calhoun)

The recently passed tax bill imposes a 21% excise tax on excess compensation and excess severance benefits of certain executives of nonprofit and governmental employers. The provision has a substantial impact on the compensation and benefits that such organizations can provide for their executives. Moreover, the determination of which employers, and which executives, are covered includes several traps for the unwary.

Chart comparing elective plans updated
(Posted on November 24, 2014 by Carol V. Calhoun)

The chart comparing 457(b) plans, 403(b) plans, 401(k) plans, and deemed IRAs as vehicles for voluntary employee savings has now been updated to reflect recent developments, including new limits for 2015.

IRS Issues Guidance on Patient-Centered Outcomes Research Trust Fund (“PCORI”) Fee
(Posted on July 25, 2013 by Carol V. Calhoun)

The IRS has now issued guidance, in question and answer form, on the new Patient-Centered Outcomes Research Trust Fund (“PCORI”) Fee. The guidance confirms that the fee applies even to health plans for tax-exempt organizations or governmental entities.

Expanded Correction Program for 403(b) Plans
(Posted on April 4, 2013 by Carol V. Calhoun)

Rev. Proc. 2013-12 for the first time allows 403(b) plans (tax-sheltered annuities or custodial accounts for employees of public schools, churches, and certain other tax-exempt organizations) the same ability to correct plan errors under the Employee Plans Compliance Resolution System (“EPCRS”) as is provided in the case of qualified plans. The IRS has now issued a plain language “Fix-It Guide” for 403(b) plans that discusses common mistakes, how to avoid them, and how to fix them if they occur.