457(f) Deferred Compensation

Change is a constant. Velocity is the variable.

Of the myriad of executive benefit plans in the credit union space, the 457(f) is the granddaddy of them all. Simple, precise, and effective, the 457(f) is a deferred compensation arrangement that provides key executives with a monetary benefit at a predetermined future date.

457(f) arrangements are simple and unique to non-profits, and because 457(f) arrangements must include a “substantial risk of forfeiture” on the part of the executive, the plans are often referred to as “golden handcuffs.”

Executives come and go. That’s just a fact, as no one plans on working forever. From the largest credit unions in the country to the humblest community operations, every credit union must face this reality eventually.

The defining difference is how a credit union prepares for and manages these changes. A carefully planned transition using a 457(f) can provide a credit union with the edge it needs. On the other hand, the unexpected departure of a key executive can leave that same credit union stalled in meeting its goals as it searches for a replacement.

457(f) plans are proven ways of providing the stability and consistency needed to navigate executive changes. By retaining your leadership for longer, you can keep your credit union moving in a steadier direction without having to stop and find your bearings every few months or years.

457(f) plans are very easy to set up and administer. If you’re curious about how to establish a no-strings-attached deferred compensation plan for an executive at your credit union, reach out to us and we’ll be glad to help answer your questions.