Hide login
Glossary of Terms
D
Username

Password

Not Yet Registered?
You can have access to our in-depth exclusive content on NQDC in just a few clicks.
X
Forgotten Password?
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
Random Term
Section 457A

Somewhat similar to IRC Section 409A, Section 457A of the Internal Revenue Code governs deferred compensation for US employees working for certain “nonqualified entities” (e.g. US citizens working for a foreign company in a tax haven such as Bermuda). While developed largely to cover offshore hedge funds, Section 457A has a broader application. In short, deferred compensation stops being tax-deferred once it vests and is no longer subject to a risk of forfeiture. Penalties like those under Section 409A can apply. The IRS issued guidance on this provision in Notice 2009-8 and Revenue Ruling 2014-18. Several law firms issued memos on the revenue ruling, including Winston & Strawn, Proskauer Rose, and Squire Patton Boggs.

Section 457A affects not only compensation earned by US citizens working abroad (i.e. expatriates) but also nonresident aliens with existing deferred compensation who become US tax residents (i.e. green-card holders). For more details about Section 457A, see a memo from the law firm Littler.