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Nonprofit Law/Retirement plan for 501c3 employee


I'm on the board of a 501c3 organization.  The ED is the only paid employee and has been in that position for many years.  The board has never set up a retirement plan, and now that the ED is 72 and probably nearing retirement, we would like to offer some kind of retirement to her.  It would ideally be in the form of a lump sum deposit in a retirement vehicle that she could draw from in her retirement; there would be no employee contributions called for. We never had the money to do this before, but in the last two or three years donations have gone up substantially.  Do you have any suggestions on how this might be done in an IRS-friendly way?  Thanks.

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. A 501(c)(3) organization may offer to place a certain amount for deferred compensation but at 72 years of age the payments deposited would probably be taxable to the employee as normal income for that tax year.  Note also that your organization, as a 501(c)(3) organization, may not give an employee more than a reasonable amount of compensation for any tax year.

If you want to hire me to work on the drafting of certain documents that would be required, send me an email directly to my email address below and I will quote you my fees.

Harvey Mechanic
Attorney at Law

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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