On Friday, October 3, 2008, President Bush signed the Emergency Economic Stabilization Act of 2008 (the ?Act?) into law. Section 801 of the Act added new Section 457A (Nonqualified Deferred Compensation from Tax Indifferent Parties) to the Internal Revenue Code (the ?Code?). In general, new Code Section 457A provides that any compensation deferred under a nonqualified deferred compensation plan of a nonqualified entity shall be includible in gross income when there is no substantial risk of forfeiture of the right to receive such compensation. According to Alan Tawshunsky, deputy division counsel and deputy associate chief counsel (employee benefits) for the I.R.S. Office of Associate Chief Counsel (Tax-Exempt and Government Entities), this new rule is targeted at hedge funds and private equity funds, but is broad enough to affect other arrangements as well.[1]

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