Hedge fund managers are painfully aware of the U.S. government’s efforts to eliminate the tax benefits associated with their foreign deferred compensation plans. In 2004, Congress amended the Internal Revenue Code by adding Section 409A, which prohibited the use of foreign trusts in connection with deferred compensation plans. More recently, in 2008, Congress enacted IRC § 457A, which makes foreign deferred compensation plans fully income taxable as of January 1, 2017. As a result, the tax bar has been working overtime to develop tax compliant strategies that would mitigate the disastrous effects of Congress’ campaign to increase taxes on hedge fund managers’ income. Tax attorneys’ efforts have, however, been largely unsuccessful – until now. In a guest article, Kenneth Rubinstein, Senior Partner at Rubinstein & Rubinstein, LLP, details one strategy that has been developed that will significantly minimize the income tax payable on foreign deferred compensation and blunt the effect of IRC § 457A in a tax compliant manner. Based on the use of a “hybrid” trust that avoids the prohibitions of IRC § 409A and utilizing the long-standing tax advantages that Congress and the Internal Revenue Code bestow upon life insurance, this strategy will allow early access to the majority of deferred compensation assets on a tax-free basis and eliminate estate tax on plan assets upon the death of the manager.