SECURE 2.0 Increases 457(b) De Minimis Amount

457(b) plans have the option of permitting participants to make voluntary, one-time "de minimis" distributions of small amounts if (1) the participant has not deferred funds into the plan for at least two years prior to distribution and (2) the participant has not taken a de minimis distribution from the employer sponsoring the plan in the past. The employer can elect the amount that can be distributed under these rules. Under the SECURE Act 2.0, the maximum threshold that can be set is $7,000, up from $5,000 under pre-SECURE 2.0 law. The increase has often been overlooked because the 457(b) de minimis distribution rules cross-reference the IRC Section governing the statutory limit for mandatory small balance cash outs for ordinary defined contribution plans. The increase was effective as of January 1, 2024. 457(b) sponsors have until the end of 2029 to amend their documents to reflect SECURE 2.0 changes. For more information on the tax rules governing 457(b) plans, visit Tax Facts Online. Read More: Q 3602. Note: Q is updated.