Mindi M. Johnson, Julie L. Hamlet, Amanda J. Dernovshek and Olivia K. Reid (Law Clerk)

Recent changes under SECURE 2.0 require all 457(b) non-governmental (tax-exempt) plan sponsors to adopt compliance amendments by the end of 2025 to remain in compliance with federal law. While the amendment deadline for most other plan types was extended, 457(b) top hat plans remain subject to the original 2025 deadline. These are the changes required for each such plan document:

1. Required Minimum Distribution Age Updates. SECURE 2.0 increased the age at which participants must begin taking required minimum distributions from the plan. Participants born between 1951–1959 must begin taking required minimum distributions at age 73 (previously 72). Participants born in 1960 or later must begin taking required minimum distributions at age 75.
2. 10-Year Distribution Rule for 457(b) Plans. When a participant dies, most non-spouse beneficiaries must take a distribution of the entire inherited account within 10 years of the participant’s death. The specific distribution requirements will depend on the age of the participant at death and whether they had begun taking required minimum distributions.

These changes are mandatory and must be implemented into your plan documents by December 31, 2025. If you would like assistance reviewing your plan or ensuring your plan is fully compliant with these new requirements, please contact us. We are here to help you navigate these updates with confidence.