diff --git a/sdk/src/main/java/software/amazon/lambda/durable/execution/ExecutionManager.java b/sdk/src/main/java/software/amazon/lambda/durable/execution/ExecutionManager.java
index 466ed8fc0..3c84b43fa 100644
--- a/sdk/src/main/java/software/amazon/lambda/durable/execution/ExecutionManager.java
+++ b/sdk/src/main/java/software/amazon/lambda/durable/execution/ExecutionManager.java
@@ -293,6 +293,14 @@ public void suspendExecution() {
         throw ex;
     }
 
+    /**
+     * returns {@code true} if the execution is terminated exceptionally (with a {@link SuspendExecutionException} or an
+     * unrecoverable error).
+     */
+    public boolean isExecutionCompletedExceptionally() {
+        return executionExceptionFuture.isCompletedExceptionally();
+    }
+
     private void stopAllOperations(Exception cause) {
         registeredOperations.values().forEach(op -> op.getCompletionFuture().completeExceptionally(cause));
     }
diff --git a/sdk/src/main/java/software/amazon/lambda/durable/operation/BaseDurableOperation.java b/sdk/src/main/java/software/amazon/lambda/durable/operation/BaseDurableOperation.java
index a5026517e..3acd00bc1 100644
--- a/sdk/src/main/java/software/amazon/lambda/durable/operation/BaseDurableOperation.java
+++ b/sdk/src/main/java/software/amazon/lambda/durable/operation/BaseDurableOperation.java
@@ -229,6 +229,15 @@ protected void runUserHandler(Runnable runnable, String contextId, ThreadType th
             executionManager.setCurrentThreadContext(new ThreadContext(contextId, threadType));
             try {
                 runnable.run();
+            } catch (Throwable throwable) {
+                // Operations always wrap the user's function and handles all possible exceptions except for
+                // SuspendExecutionException.
+                if (!executionManager.isExecutionCompletedExceptionally()
+                        && !(throwable instanceof SuspendExecutionException)) {
+                    logger.error("An unhandled exception is thrown from user function: ", throwable);
+                    throw terminateExecutionWithIllegalDurableOperationException(
+                            "An unhandled exception is thrown from user function: " + throwable);
+                }
             } finally {
                 if (contextId != null) {
                     try {
diff --git a/sdk/src/main/java/software/amazon/lambda/durable/operation/StepOperation.java b/sdk/src/main/java/software/amazon/lambda/durable/operation/StepOperation.java
index 5283e0d51..b7d72d34b 100644
--- a/sdk/src/main/java/software/amazon/lambda/durable/operation/StepOperation.java
+++ b/sdk/src/main/java/software/amazon/lambda/durable/operation/StepOperation.java
@@ -2,6 +2,7 @@
 // SPDX-License-Identifier: Apache-2.0
 package software.amazon.lambda.durable.operation;
 
+import java.time.Instant;
 import java.util.concurrent.CompletableFuture;
 import java.util.function.Function;
 import software.amazon.awssdk.services.lambda.model.ErrorObject;
@@ -74,7 +75,7 @@ protected void replay(Operation existing) {
                 }
             }
             // Step is pending retry - Start polling for PENDING -> READY transition
-            case PENDING -> pollReadyAndExecuteStepLogic(existing, attempt);
+            case PENDING -> pollReadyAndExecuteStepLogic(existing.stepDetails().nextAttemptTimestamp(), attempt);
             // Execute with current attempt
             case READY -> executeStepLogic(attempt);
             default ->
@@ -83,9 +84,8 @@ protected void replay(Operation existing) {
         }
     }
 
-    private CompletableFuture<Void> pollReadyAndExecuteStepLogic(Operation existing, int attempt) {
-        var nextAttemptInstant = existing.stepDetails().nextAttemptTimestamp();
-        return pollForOperationUpdates(nextAttemptInstant)
+    private void pollReadyAndExecuteStepLogic(Instant nextAttemptInstant, int attempt) {
+        pollForOperationUpdates(nextAttemptInstant)
                 .thenCompose(op -> op.status() == OperationStatus.READY
                         ? CompletableFuture.completedFuture(op)
                         : pollForOperationUpdates(nextAttemptInstant))
@@ -163,19 +163,19 @@ private void handleStepFailure(Throwable exception, int attempt) {
 
         if (isRetryable && retryDecision.shouldRetry()) {
             // Send RETRY
+            var retryDelayInSeconds = Math.toIntExact(retryDecision.delay().toSeconds());
             var retryUpdate = OperationUpdate.builder()
                     .action(OperationAction.RETRY)
                     .error(errorObject)
                     .stepOptions(StepOptions.builder()
                             // RetryDecisions always produce integer number of seconds greater or equals to
                             // 1 (no sub-second numbers)
-                            .nextAttemptDelaySeconds(
-                                    Math.toIntExact(retryDecision.delay().toSeconds()))
+                            .nextAttemptDelaySeconds(retryDelayInSeconds)
                             .build());
             sendOperationUpdate(retryUpdate);
 
             // Poll for READY status and then execute the step again
-            pollReadyAndExecuteStepLogic(getOperation(), attempt + 1);
+            pollReadyAndExecuteStepLogic(Instant.now().plusSeconds(retryDelayInSeconds), attempt + 1);
         } else {
             // Send FAIL - retries exhausted
             var failUpdate =