CEO Retirement Package

fondy21

Question.

The board of directors has asked for recommendations for a retirement package for our CEO, who will be retiring in 2 years. Our organizational details are as follows.

CEO Responsible for:

Milwaukee County
Non-Profit
Health Care
80 Million Budget
1200 employees



[email]gthorpe@fdllutheranhome.org[/email]

Thanks~

marc

Since you are a non-profit, you have some pitfalls of which to be aware that for profits do not have. Watch out for Inurnment! You must be careful what you do for an influential individual that you would not do for other EEs.

This area of the tax code is quite complex - violations here can cause you to lose your exempt status.

Under the Internal Revenue Cose 501 (c)(3), the exemption from federal taxes is granted to entities which are organized and operated exclusively for religious, educational, or charitable purposes. The exemption is further conditioned on the organization being one in which "no part of the net income of which inurns to the benefit of any provate shareholder or individual."

Thus any "unjust enrichment equals inurnment." If the transaction is looked at by the IRS, they will try to determine is the compensation is reasonable, happened at arms length, and was not under undue control by the individual.

I would not do any of this without competent tax advice.