The Internal Revenue Service will issue guidance clarifying the 20 percent penalty for executives divesting a deferred compensation arrangement.

The new regulations will translate into significant savings for incoming Treasury Secretary Henry Paulson. Paulson will sell off the more than $470 million he owns in Goldman Sachs stock to comply with conflict-of-interest provisions for his new position. The guidance says that any executive divesting a deferred compensation arrangement to specifically comply with government rules on conflict of interest doesn't have to pay the penalty.

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