Restrictions on deferred compensation

The recent introduction of Sec. 457A to the US Internal Revenue Code represents a notable development with regard to the tax treatment of executive pay packages. This new section will operate together with the already existing Sec. 409A to target remuneration to service providers which is deferred so that the service providers need not include the remuneration payable in their income for tax purposes. The new section aims to restrict deferral by imposing specific and stricter conditions on certain entities.