Compensation Under Pressure

Today’s tax-exempt organizations face mounting headwinds:

• Public Optics & Form 990 Disclosure – every dollar is visible.
• Section 4960 Excise Tax – 21 % tax on compensation above $1 million.
• No Equity Alternatives – nonprofits can’t issue stock or options.
• SECURE 2.0 Roth Mandate – limits traditional pre-tax savings.
• Reasonableness Standards – compensation must be justified against a constrained nonprofit market.

The result: fewer tools to recruit and retain critical talent—just as competition from for-profit systems intensifies.

Overview

The Capital Accumulation Plan (CAP) is Simplicity Keystone’s proprietary executive benefit program built for the nonprofit environment.

Structured as a Loan Regime Split-Dollar arrangement under Treas. Reg. § 1.7872-15, it enables organizations to provide supplemental retirement benefits without creating P&L expense or unfunded liabilities, and ensures full recovery of all advances with IRS-prescribed interest.

Key Advantages

• 100 % Recoverable: Employer contributions become a balance-sheet asset.
• No P&L Expense: Enhances operating income each year.
• Governance Friendly: Not reported as current compensation on Form 990 Schedule J.
• Flexible Design: Employer-paid, employee-paid, or hybrid.
• Tax Efficient: Pre-tax contributions → tax-deferred growth → tax-free distributions.
• Proven Results: > 90+ organizations; > 2,000 participants; > 99 % five-year retention.

Compliance & Validation

• Structured under Treas. Reg. § 1.7872-15 (Loan Regime)
• Exempt from §§ 457(f) and 409A
• Reviewed by the IRS on multiple occasions
• Supported by multiple national and regional legal-tax opinions

Real-World Applications

• Executive Retention Programs
• Physician Compensation Arrangements
• Practice Acquisition Structuring
• Voluntary Salary Reduction Plans