diff --git a/.github/workflows/ci.yml b/.github/workflows/ci.yml
index 27d87ff8..5d1405c5 100644
--- a/.github/workflows/ci.yml
+++ b/.github/workflows/ci.yml
@@ -29,11 +29,11 @@ jobs:
         ref: ${{ github.event.pull_request.head.sha }}
       if: ${{ github.repository_owner == 'puppetlabs' }}
 
-    - name: Activate Ruby 2.7
+    - name: Activate Ruby 3.1
       uses: ruby/setup-ruby@v1
       if: ${{ github.repository_owner == 'puppetlabs' }}
       with:
-        ruby-version: "2.7"
+        ruby-version: "3.1"
         bundler-cache: true
 
     - name: Print bundle environment
@@ -69,10 +69,10 @@ jobs:
       with:
         ref: ${{ github.event.pull_request.head.sha }}
 
-    - name: Activate Ruby 2.7
+    - name: Activate Ruby 3.1
       uses: ruby/setup-ruby@v1
       with:
-        ruby-version: "2.7"
+        ruby-version: "3.1"
         bundler-cache: true
 
     - name: Print bundle environment
@@ -93,7 +93,7 @@ jobs:
       run: |
         bundle exec rake 'litmus:install_module'
 
-    - name: Authenitcate with GCP
+    - name: Authenticate with GCP
       run: |
         echo '${{ secrets.GCP_CONNECTION }}' >> creds.json
         bundle exec bolt file upload creds.json C:\\creds.json --targets ssh_nodes --inventoryfile spec/fixtures/litmus_inventory.yaml
diff --git a/lib/puppet/type/sqlserver_instance.rb b/lib/puppet/type/sqlserver_instance.rb
index b33f4d09..5afb7dcd 100644
--- a/lib/puppet/type/sqlserver_instance.rb
+++ b/lib/puppet/type/sqlserver_instance.rb
@@ -131,7 +131,8 @@ def validate
   end
 
   def set?(key)
-    !self[key].nil? && !self[key].empty?
+    self_key = resolve_deferred_value(self[key])
+    !self_key.nil? && !self_key.empty?
   end
 
   def validate_user_password_required(account, pass)
@@ -144,11 +145,11 @@ def validate_user_password_required(account, pass)
   end
 
   def domain_or_local_user?(user)
-    PuppetX::Sqlserver::ServerHelper.is_domain_or_local_user?(user, Facter.value(:hostname))
+    PuppetX::Sqlserver::ServerHelper.is_domain_or_local_user?(resolve_deferred_value(user), Facter.value(:hostname))
   end
 
   def strong_password?(key)
-    password = self[key]
+    password = resolve_deferred_value(self[key])
     return unless password
 
     message_start = "Password for #{key} is not strong"
@@ -162,4 +163,12 @@ def strong_password?(key)
 
     true
   end
+
+  # When preprocess_deferred is false, deferred values remain unresolved at the time of validation, causing it to fail.
+  # To address this, following logic is added to explicitly resolve deferred values during validation
+  def resolve_deferred_value(value)
+    return value unless value.is_a?(Puppet::Pops::Evaluator::DeferredValue)
+
+    value.resolve
+  end
 end
diff --git a/spec/acceptance/sqlserver_instance_spec.rb b/spec/acceptance/sqlserver_instance_spec.rb
index d6934415..f9af473b 100644
--- a/spec/acceptance/sqlserver_instance_spec.rb
+++ b/spec/acceptance/sqlserver_instance_spec.rb
@@ -134,4 +134,73 @@ def sql_query_is_user_sysadmin(username)
       end
     end
   end
+
+  # Ensure that the instance can be created with deferred values
+  # for service account and password, which are resolved at the time of
+  # the instance creation.
+  # This is useful for scenarios where the values are not known at the time
+  # of the Puppet run, such as when using Hiera to fetch values from a
+  # secure vault or when the values are dynamically generated.
+  def ensure_sqlserver_instance_with_deferred_values(inst_name)
+    features = ['SQLEngine', 'Replication', 'FullText', 'DQ']
+    host_computer_name = run_shell('CMD /C ECHO %COMPUTERNAME%').stdout.chomp
+    sysadmin_accounts = ["#{host_computer_name}\\travis"]
+    user = Helper.instance.run_shell('$env:UserName').stdout.chomp
+    password = Helper.instance.run_shell('$env:pass').stdout.chomp
+    password = 'Hunter-2' if password.empty?
+
+    pp = <<-MANIFEST
+    sqlserver_instance{'#{inst_name}':
+      name                  => '#{inst_name}',
+      ensure                => 'present',
+      source                => 'H:',
+      security_mode         => 'SQL',
+      sa_pwd                => 'Pupp3t1@',
+      features              => #{features},
+      sql_sysadmin_accounts => #{sysadmin_accounts},
+      agt_svc_account       => Deferred('pick', ['#{user}']),
+      agt_svc_password      => Deferred('pick', ['#{password}']),
+      windows_feature_source => 'I:\\sources\\sxs',
+      install_switches => {
+        'UpdateEnabled' => 'false',
+      },
+    }
+    MANIFEST
+
+    idempotent_apply(pp)
+  end
+
+  context 'Deferred values' do
+    before(:context) do
+      @deferred_user = 'travis'
+      pp = <<-MANIFEST
+      user { '#{@deferred_user}':
+        ensure => present,
+        password => 'Puppet01!',
+      }
+      MANIFEST
+      apply_manifest(pp, catch_failures: true)
+    end
+
+    after(:context) do
+      pp = <<-MANIFEST
+      user { '#{@deferred_user}':
+        ensure => absent,
+      }
+      MANIFEST
+      apply_manifest(pp, catch_failures: true)
+    end
+
+    it 'validate deferred values' do
+      inst_name = new_random_instance_name
+      expect { ensure_sqlserver_instance_with_deferred_values(inst_name) }.not_to raise_error
+    end
+
+    it 'apply deferred values' do
+      inst_name = new_random_instance_name
+      ensure_sqlserver_instance_with_deferred_values(inst_name)
+
+      run_sql_query(run_sql_query_opts(inst_name, sql_query_is_user_sysadmin(@deferred_user), 1))
+    end
+  end
 end
diff --git a/spec/unit/puppet/type/sqlserver_instance_spec.rb b/spec/unit/puppet/type/sqlserver_instance_spec.rb
index e3d87bda..de04ecf6 100644
--- a/spec/unit/puppet/type/sqlserver_instance_spec.rb
+++ b/spec/unit/puppet/type/sqlserver_instance_spec.rb
@@ -84,4 +84,28 @@
       end
     end
   end
+
+  describe 'agt_svc_account' do
+    context 'when value is a deferred value' do
+      let(:args) do
+        basic_args.merge({ agt_svc_account: Puppet::Pops::Evaluator::DeferredValue.new(proc { 'nexus\\travis' }) })
+      end
+
+      it 'validate' do
+        subject = Puppet::Type.type(:sqlserver_instance).new(args)
+        expect(subject.resolve_deferred_value(subject[:agt_svc_account])).to eq('nexus\\travis')
+      end
+    end
+
+    context 'when value is not a deferred value' do
+      let(:args) do
+        basic_args.merge({ agt_svc_account: 'nexus\\travis' })
+      end
+
+      it 'validate' do
+        subject = Puppet::Type.type(:sqlserver_instance).new(args)
+        expect(subject.resolve_deferred_value(subject[:agt_svc_account])).to eq('nexus\\travis')
+      end
+    end
+  end
 end