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First Day of the Month – Governmental 457(b) Plans

Timing of deferral elections

Participants of governmental 457(b) plans can now elect to defer a portion of their compensation any time prior to the date compensation becomes available. 


How is SECURE 2.0 relevant to you?

Select one of the options below to learn more.

Prior to this provision in SECURE 2.0, a 457(b) governmental plan participant had to enter into a salary reduction agreement before the beginning of the month to which the agreement would apply. 

That’s right, participants had to determine how much of their compensation to defer—at least a month in advance. In addition, new employees had to make deferral elections on or before their first day of work.

SECURE 2.0 brings deferrals to governmental 457(b) plans in line with 401(k) and 403(b) plans; meaning a participant can start making contributions as soon as administratively feasible after entering into a salary reduction agreement. One thing to keep in mind is that this only applies to governmental 457(b) plans. Tax-exempt 457(b) plans are still subject to the first day of the month requirement.

How much can you defer?

View contribution limits

This optional provision simplifies the rules of administering a governmental 457(b) plan. However, these changes do not happen automatically. Plan sponsors must make changes to plan documents—which may require approval by local government or a governing board of directors.

Corebridge Financial: Moving financial futures forward.

As these SECURE 2.0 provisions become effective, plan sponsors will have more flexibility in helping employees achieve personal and financial wellness. For more information about these and other SECURE 2.0 provisions, reach out to your Corebridge representative and visit our online hub. This new online resource breaks down and simplifies relevant provisions of SECURE 2.0. We will continue to update the hub with more relevant and timely content—so please visit often.

                                   

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