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New Internal Revenue Code Section 457A
October 20, 2008 Full PDF
New Internal Revenue Code Section 457A was added by the Emergency Economic Stabilization Act, enacted on October 3. The new rules render ineffective many nonqualified deferred compensation plans, including those often used by managers of offshore hedge funds to defer taxes on management incentive fees. The new rules also operate outside the hedge fund arena, and the provision might, for example, limit deal bonus and phantom equity plans for managers of operating partnerships owned by private equity funds.