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ARTICLE · 15 AUGUST 2025

IRS Section 457(f) Plans: An Update Amid Regulatory Uncertainty

Holland & Knight
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Section 457(f) of the U.S. Internal Revenue Code provides a framework for nonqualified deferred compensation arrangements commonly offered by tax-exempt and governmental employers.

United StatesEmployment and HR
Tyrone P. Thomas
Tyrone P. Thomas
Connor Jordan
Connor Jordan
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Highlights

  • Section 457(f) of the U.S. Internal Revenue Code provides a framework for nonqualified deferred compensation arrangements commonly offered by tax-exempt and governmental employers.
  • 457(f) plans require careful navigation of income recognition rules, vesting conditions and heightened sensitivity to recent and ongoing regulatory developments at the federal and state levels.

Section 457(f) of the U.S. Internal Revenue Code provides a framework for nonqualified deferred compensation arrangements commonly offered by tax-exempt and governmental employers. These plans are frequently used to recruit and retain senior executives and highly compensated employees, particularly in nonprofit sectors, by permitting compensation deferrals that are not subject to the annual contribution limits applicable to qualified retirement plans such as 401(k) or 403(b) arrangements.

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