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End of the Year Amendment Requirement for 457(b) Plans of Tax-Exempt Organizations

In August and September of 2022, the IRS issued two notices extending the deadline for amending documents of qualified plans, 403(b) plans, and governmental plans to incorporate the requirements of the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”), the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), and the Bipartisan American Miners Act of 2019 (the “Miners Act”). (See our blogs on Notice 2022-33 and Notice 2022-45). The original deadline for amendments to conform to these Acts was generally the end of 2022, but the Notices delayed the deadline for most plans until December 31, 2025 (additional rules apply to governmental plans). However, these Notices did not provide a similarly extended deadline for 457(b) plans of tax-exempt employers.


Under a 457(b) plan, a tax-exempt employer can provide deferred compensation to certain employees who qualify as part of a “top-hat” group. A top-hat group consists of employees who are members of a “select group of management or highly compensated employees”. The amount that can be contributed to a 457(b) plan is limited by statute and subject to cost of living adjustments each year (the limit is $20,500 in 2022). Note that governmental employers can also sponsor plans under 457(b), but those plans were included in the grant of the extension to amend their plan documents.


The only provision of the Acts that requires an amendment to a 457(b) plan is the change in the required minimum distribution rules (“RMDs”) enacted under the SECURE Act. The SECURE Act changed the date that RMDs are required to begin for most employees who were born on or after July 1, 1949, from 70 ½ to 72. The SECURE Act also made significant changes in the requirements for distributions to beneficiaries.


Plan sponsors of 457(b) plans should review their plan documents to determine whether they need to amend the plan before the end of the year. Some document providers have already sent out amendments to incorporate the new RMD rules. If you received such an amendment, you should make sure that you have properly adopted it. If you have not yet been sent an RMD amendment, we suggest that you ask your plan document provider if it has prepared an amendment for your plan document.


For more information or if you want assistance in complying with this requirement, please feel free to contact your Boutwell Fay attorney.



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