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Alert: December 31, 2025, Deadline for Non-Profit 457(b) Plan Amendments

  • Writer: Boutwell Fay LLP
    Boutwell Fay LLP
  • Oct 2
  • 2 min read

Non-profit Plan Sponsors of 457(b) deferred compensation plans should be aware of an important upcoming compliance deadline. The IRS requires that all non-profit 457(b) plans be amended by December 31, 2025, to incorporate the recent legislative and regulatory changes related to the SECURE Act and SECURE 2.0. Failure to adopt the required plan amendments could lead to compliance issues because of inconsistencies between the plan document and operations.


Timely adoption of these amendments is important to keep your 457(b)-plan aligned with current law and IRS requirements. Because nonqualified deferred compensation arrangements under §457(b) are subject to strict compliance rules, the IRS requires plan documents to accurately reflect both the legal requirements and the way the plan has been operated. 


Changes that require plan amendments for non-profit 457(b) deferred compensation plans by December 31, 2025:


  • Increase in De Minimis Distribution Limit

    • The automatic cash-out limit was increased from $5,000 to $7,000 beginning in 2024.

    • Plans that took advantage of the increase in 2024 or 2025 must be amended by 12/31/2025 so that the plan document aligns with plan operations.  


  • Required Minimum Distributions

    • SECURE 2.0 raises the age when participants must begin taking required minimum distributions (RMDs). The required beginning date is now age 73 for individuals who reach age 72 after 2022 and will increase to age 75 for individuals born in 1960 or later.

    • For most non-spouse beneficiaries, the “stretch” payout (over the beneficiaries’ life-expectancy) option has been replaced by the 10-year rule, which requires the entire account to be distributed within 10 years of the participant’s death.

    • Some beneficiaries are exempt from the 10-year payout rule. Surviving spouses, disabled or chronically ill individuals, minor children (until adulthood), and beneficiaries close in age to the participant (within 10 years) may still use life-expectancy payouts.


For non-profit plan sponsors of 457(b) plans, this is an important opportunity to not only satisfy the required updates but also to review any additional changes to conform the plan document to intended plan design and operations going forward. Amendments must be formally adopted by December 31, 2025, and plans should operate in accordance with the updated provisions to avoid compliance problems. 


Note: Governmental 457(b) plans have several additional years to adopt the amendments. Governmental plans need to be amended no earlier than December 31, 2029. 


Action Steps for Plans Sponsors:


  1. Review Amendment Requirements

  2. Evaluate Plan Design Updates

  3. Adopt the Amendments by the Deadline

  4. Confirm Operational Compliance


Your plan document provider may send you a draft amendment for your review. While these drafts are helpful, each plan sponsor should confirm the language is appropriate for their organization and consistent with actual plan operations. Our Team would be happy to review any draft amendment you receive to help ensure it meets the requirements and aligns with your plan design. 



Boutwell Fay LLP

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