Straight to The Point
NCUA opens CDFI certification round
Federally insured low-income credit unions can now apply to become certified as a community development financial institution. The agency will offer three CDFI-certification application rounds in 2017, with the current round running through March 17.
CUNA Mutual Group: Supplemental benefits provide recruitment edge
Recruiting and retaining high-performing executives and professionals could rest on the supplemental benefits credit unions are able to provide, according to CUNA Mutual Group. There are limitations on how much credit union executives can contribute and receive from traditional retirement plans, but supplemental executive retirement plans, known as SERPS, can serve as viable and important complements to conventional plans.
SERPs are nonqualified retirement plans that provide benefits beyond those offered by qualified plans. Although qualified plans may have more tax advantages, nonqualified plans offer more flexibility in customizing contribution amounts and timing of distributions. SERPs allow employers to build a powerful supplemental benefits package, which can create greater loyalty to the credit union.
In the next two years, 10 percent of credit union CEOs are expected to retire, and two-thirds of new CEOs are hired externally from the financial services industry, according to CUNA Mutual Group. SERPs can help credit unions stay competitive in the search for new talent and strengthen leadership continuity.
The 457(b) plan supplements a 401(k) plan and defers income taxes on contributions until the benefits are paid to them at retirement. Although 457(b) plans allow for self-direction of investments, they have a contribution limit.
A 457(f) plan has no contribution limits, and taxes are paid in the year the “risk of forfeiture” lapses—when the executive becomes vested, which is typically when the benefit is paid.
Life insurance-based plans can be a more cost-effective alternative to 457(b) or (f) plans, CUNA Mutual Group writes. The credit union can lend the executive money or offer a bonus to pay the annual premiums, and the executive owns the policy. These plans have no program limits, and income from life insurance can be withdrawn income tax-free.
To learn more about SERPs or other supplemental benefits programs, contact Josh Pesh, director of executive benefits at CUNA Mutual Group, at firstname.lastname@example.org or (800) 356-2644, ext. 665.8223.
Reminder: NCUA hosting SBA loan webinar today
Individuals can learn more about the Small Business Administration’s loan programs during a free webinar hosted by NCUA. Scheduled for 2 p.m. today, the webinar will provide an update on the new SBA One automated lending platform and discuss the SBA’s Microenterprise Loan Program. The webinar will also provide an update on NCUA’s member-business lending rule.
State and National News
CU Times: In a recent survey, only 24 percent of the millennial respondents showed basic financial literacy, and only 8 percent demonstrated a high level of knowledge – More
CUToday: With Republicans clamoring to replace Richard Cordray as director of the CFPB, it raises new questions over who might replace him – More
Reuters: Rates need to rise more briskly than markets now seem to expect, according to Federal Reserve Bank of Richmond President Jeffrey Lacker – More
PYMNTS: A wave of cyberattacks targeting financial institutions in the U.S., Mexico, the U.K. and Poland may originate from North Korea – More
New York Times: Several large banks have begun rolling out ATMs that utilize mobile phones and NFC technology rather than debit cards – More